MAPI Canadian Economic Outlook: Improvement in 2014, but with conditions

Canada’s economy rebounded in the first quarter of 2013 as GDP grew at a 2.5% annual rate. Struggles in the manufacturing sector may limit growth in 2013, but there is potential for a turnaround in 2014, according to a report from the Manufacturers Alliance for Productivity and Innovation (MAPI).

In the Canadian Outlook, 2013-2014, David Boisclair, MAPI economic consultant and report author, notes that Canada’s fortunes are partly contingent upon anticipated growth in the United States.

MAPI’s industry forecasting model for 15 industries representing 80% of Canadian manufacturing output suggests the recovery will be stronger in 2014 than 2013, particularly for durable goods industries.

While two of the eight durable goods industries are forecast to show growth in 2013, all eight are anticipated to increase in 2014. Wood products production, at 10.5%, is expected to lead in 2013 and electrical equipment is forecast to advance by 5.7%. In 2014, wood products production is expected to grow by 10%, followed by machinery at 5.5%.

Four of the seven nondurable goods industries should show increases for 2013 and six should improve in 2014. The category of miscellaneous products, which includes items such as sporting goods and scientific instruments, is anticipated to grow by 9.9% in 2013. Chemicals are forecast to improve by 5.3% in 2014. Textiles are expected to decline by 15.4% this year and by 10.4% in 2014.

Overall, the 15 industries tracked by the MAPI model should contract by 0.4% in 2013 and grow a reasonable 3.7% in 2014.

Boisclair cautions that there are some outside influences at play.

“This year and 2014 are still promising, but with conditions, including the performance of exports and business investment and, in turn, what goes on south of the border,” he explained. “The manufacturing sector is once again expected to fare quite unevenly, with durable goods in better shape than nondurable goods. Nevertheless, for most industries 2014 should bring positive growth after a much rockier 2013 than many had hoped.”