The high-flying Canadian dollar will wither this year and next because of lower oil and commodity prices, a government report predicted Thursday.
The currency, which now sits above 95 cents (U.S.), will slide to 86-to-87 cents by the end of this year and trade between 83 and 84 cents by the end of next year, Export Development Canada said. It's sticking to its fall forecast, despite the loonie's 11-per-cent appreciation this year.
“Our forecast calls for an easing in oil and commodity prices as global growth moderates and new production comes on line (especially for metals),” the EDC said. “The pullback in commodity prices – combined with the unwinding of interest rate expectations – should allow the Canadian dollar to ratchet down.”
The agency now expects exports to rise this year, by 2.5-to-3 per cent from its previous forecast of a 1-per-cent decline. “Stronger pricing for energy, metals and grains has boosted this year's outlook,” it said.
It sees exports climbing 1 per cent next year.
The strongest export growth for Canada is expected in the energy, metals, fertilizers and grains sectors – industries seeing strong pricing and demand. Weakness, however, will likely continue in the forestry, autos and consumer goods sectors – those that rely most on a weakening U.S. market.
© The Globe and Mail
