Canada Posts Trade Surplus for November
Led by energy products and automobiles, Canada’s trade balance with the rest of the world moved into a surplus in November, surprising most economists, who had anticipated a trade deficit of approximately $500 million. According to a Statistics Canada report released earlier this month, the country had a surplus of $1.07 billion during November, as opposed to a revised $487-million deficit in October.
“We had expected a reading in the black for November, and the details confirm that a stronger pace of activity in the US was a key driver of the month’s rebounding trade,” CIBC World Markets announced.
According to Statistics Canada, exports rose 3.2 percent to $40.1-billion, and “prices increased 1.7 percent, led by energy products, while volumes rose 1.6 percent, largely the result of automotive products.” Imports declined 0.8 percent to $39-billion, with both prices and volumes falling in November.
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Minister Oliver Discusses the Importance of Innovation, Diversification, and Investment to the Canadian Economy
Minister of Natural Resources Joe Oliver recently addressed the British Columbia Chamber of Commerce and the Association for Mineral Exploration of BC’s Mineral Exploration RoundUp 2012, highlighting the importance of innovation in the exploration and mining sectors and the need to diversify Canada’s energy markets. The Minister also outlined the importance of opening Canada’s natural resources sectors to new markets, such as the Asia–Pacific region.
“Vancouver is one of Canada's great economic engines and our biggest gateway to the huge economic opportunities of the growing Asia-Pacific market,” Minister Oliver said. “Those opportunities represent the potential for hundreds of thousands of jobs in Canada and literally trillions of dollars in economic activity in Vancouver, in BC and right across the country.”
In his address to the RoundUp participants, Minister Oliver detailed how Natural Resources Canada (NRCan)’s Geo-mapping for Energy and Minerals program is supporting private sector exploration investment in the North by generating modern reconnaissance-level geo-mapping data in areas with high mineral potential. He also noted that in regions of Canada with proven mineral potential, the department’s Targeted Geoscience Initiative is developing innovative mineral exploration techniques to help the industry discover new deeply buried mineral deposits in Canada.
The Minister discussed NRCan’s public geoscience programs while touring the RoundUp Trade Show floor, where he met with the Prospectors and Developers Association of Canada’s 2011 Prospector of the Year, Shawn Ryan, whose use of NRCan’s geoscientific data and knowledge products contributed to an important White Gold discovery in the Yukon.
“Canada is one of the world’s mining and energy giants, and we’re set for continued growth,” said Minister Oliver. “[We] are committed to developing the policy initiatives and making the targeted investments that will help to ensure our exploration, mining, and energy industries continue to grow and prosper long into the future.”
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Scotiabank Acquires 51 Percent of Banco Colpatria
Scotiabank this month announced the closing of its acquisition of 51 percent of Banco Colpatria, the fifth-largest banking group in Colombia in terms of loans and the sixth in terms of deposits in the country. Through this long-term partnership with Mercantil Colpatria, who retains 48.7 percent ownership, Scotiabank will participate in significant growth opportunities in Colombia. The purchase will be satisfied through a combination of $500 million in cash and 10,000,000 common shares of the Bank of Nova Scotia.
Banco Colpatria, with assets of $6.4 billion and deposits of $4.4 billion (as of November 2011), is not only Colombia's fifth-largest financial group, but it is also one of the country's leading lenders, with a positive track record of growth. The bank is the second-largest credit card issuer in Colombia and also offers commercial and consumer loans and home mortgages through its network of 175 branches and 308 ATMs.
“The approval from the regulators for this transaction is proof of the country's confidence and marks the beginning of a great future for the bank, its employees, and its customers,” said Santiago Perdomo, President of Banco Colpatria.
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Minister Ed Fast, right, and United States Representative Ron Kirk signing a two-year extension to the 2006 Canada-US Softwood Lumber Agreement this month.
Canada Secures Access to US Market for Softwood Lumber Until 2015
Minister of International Trade and Minister for the Asia-Pacific Gateway Ed Fast and United States Trade Representative Ron Kirk this month signed a two-year extension to the 2006 Canada-United States Softwood Lumber Agreement. The extension secures Canadian softwood lumber access to the US market until 2015.
“The extension of the Softwood Lumber Agreement is great news for Canadian lumber workers and their families,” said Minister Fast. “This extension agreement will bring much-needed stability and predictability to the lumber industry. By extending the agreement, we are sending a clear message that our government is committed to securing predictable access to the US market and strengthening the financial security of Canadians.”
The 2006 Softwood Lumber Agreement, which returned over $5 billion to Canadian exporters at a time when they needed it most, was set to expire on October 12, 2013. Canada and the United States have negotiated an agreement to extend it without modification and will consult on whether a further extension would be appropriate before the new expiration date in 2015. Canada has consulted widely with provincial and industry stakeholders, and they strongly support the extension to 2015.
“With one in five Canadian jobs generated by trade, our government is strongly committed to helping the forestry sector, and other sectors of our economy, expand and succeed in markets around the world,” said Minister Fast. “That’s why we’ll continue standing up for our exporters in markets around the world, including the United States – fighting for their interests and opening doors to new opportunities that will create jobs and prosperity in communities across Canada.”
The extension agreement constitutes a treaty under international law. Consistent with Government of Canada policy, the treaty will be tabled in the House of Commons for a period of 21 sitting days. It will come into force once Canada and the United States have notified each other that their respective ratification processes have been completed.
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Bank of Canada Maintains Overnight Rate Target at 1 Percent
The Bank of Canada announced on January 17 that it would maintain its target for the overnight rate at 1 percent. The Bank Rate is correspondingly 1¼ percent, and the deposit rate is ¾ percent.
The outlook for the global economy has deteriorated, and uncertainty has increased since the Bank released its October Monetary Policy Report (MPR). The sovereign debt crisis in Europe has intensified, conditions in international financial markets have tightened, and risk aversion has risen. According to the Bank, the recession in Europe is now expected to be deeper and longer than anticipated back in October. Although the Bank continues to assume that European authorities will implement sufficient measures to contain the crisis, this assumption is subject to downside risks.
In the United States, while the rebound in real GDP during the second half of 2011 was stronger than anticipated, the Bank expects the US recovery will proceed at a more modest pace going forward, owing to ongoing household deleveraging, fiscal consolidation, and spillovers from Europe. As expected, Chinese growth is decelerating towards a more sustainable pace. Commodity prices – with the exception of oil – are expected to be below the levels anticipated in the October MPR through 2013.
The Bank’s overall outlook for the Canadian economy is little changed since October. While the economy had more momentum than anticipated in the second half of 2011, the pace of growth going forward is expected to be more modest than previously envisaged, largely due to the external environment. Prolonged uncertainty about the global economic and financial environment is likely to dampen the rate of growth of business investment, the Bank anticipates, albeit to a still-solid pace.
The Bank’s decision to maintain the target for the overnight rate at 1 percent reflects all these factors and many more. With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada. The Bank says that it will continue to carefully monitor economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2-percent inflation target over the medium term.
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