29 April 2009

EDC predicts recovery in second half of 2010 

The following is excerpted from the 28 April 2009 edition of “Canadian Transportation & Logistics”.

It will be late 2010 before Canadian exports and the world economy rebound, according to the latest forecast from Export Development Canada (EDC).

“A general sequence of events, what EDC is calling the five waves of weakening, is underway and it gives light to the possible timing of a recovery,” said Peter Hall, EDC’s chief economist. “Working through the five waves is all about the economy getting back to balance.”…

Hall went on to describe the “five waves”: The collapse of the US housing market; The crash of the financial markets; A sharp drop in global demand, which is still underway; Mounting unemployment and continued layoffs; and finally the fifth wave, which has yet to be realized.

“What remains to be seen is the impact of these significant job losses on an already-stressed financial sector, which is the fifth wave of weakening. Default rates are almost sure to rise through 2009, and the way the system copes with the fallout will likely, in a big way, determine the timing of recovery,” predicted Hall….

Hall predicted the positive effects of stimulus spending will be felt around the same time the fifth wave comes crashing down, offsetting its effects. …

To summarize, EDC is predicting a 1.3% decline in global GDP in 2009 and a 2.3% increase in 2010….