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PERSPECTIVES ÉCONOMIQUES MONDIALES

Avec Peter Hall, Vice-président et économiste en chef Exportation et développement Canada

Saint-Georges – Le 17 septembre 2020

Economic InsightsPeter Hall@PeterGHallXIII

2 edc.trade/economic-insights@PeterGHallXIII Peter Hall

U.S.6.5m China

90k

Spain 566k

Italy289k

29 million

Russia1.1m

UK371k

Sources: EDC Economics; John’s Hopkins Coronavirus Research Center.

Brazil 4.3m

Canada139k

0

50

100

150

200

250

300

350

400

Mar Apr May Jun Jul Aug Sep

Global Confirmed Cases5-day average, thousandWorld total

India4.8m

South Africa649k

Mexico 668k

Peru729k

CONFIRMED COVID-19 CASESAs of September 14, 2020

3 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

65

70

75

80

85

90

95

100

105Index values, Nov 2019 = 100

RETAIL SALES: LOOKS LIKE A “V” TO ME!

Sources: Haver Analytics, EDC Economics

U.S.

Canada

Euro Area

4 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

65

70

75

80

85

90

95

100

105Index values, Nov 2019 = 100

GOODS EXPORTS: ANOTHER V-SHAPED RECOVERY!

Sources: Haver Analytics, EDC Economics

U.S.

Canada

Euro Area

5 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

70

75

80

85

90

95

100

105Index values, Nov 2019 = 100

NOT SO FOR SERVICES EXPORTS: THE DREADED “L”

Sources: Haver Analytics, EDC Economics

U.S.

CanadaEuro Area

6 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Global merchandise trade volumesannual % change

-18%-16%-14%-12%-10%

-8%-6%-4%-2%0%2%4%6%8%

2017 2018 2019 2020

Sources: CPB Netherlands Bureau for Economic Policy Analysis, WTO April 2020 Trade Forecast

WTO forecast for goods trade expects a 13% drop in 2020.

GLOBAL MERCHANDISE TRADEWhile global merchandise trade was hit hard during shutdowns in March through May, early indications suggest that a rebound began in June.

7 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20

0

20

40

60

80

100

120

140

Total

Food

Energy

FM

Autos & parts

Aerospace

Consumer

WIDE ARRAY OF RESPONSES BY INDUSTRYGoods exports, Canada, index values; Nov 2019 = 100

Sources: Haver Analytics, Statistics Canada, EDC Economics

8 edc.trade/economic-insightsPeter Hall@PeterGHallXIII

Travel restrictions grounded most international air travel, which has grown slowly to remain about 40% below pre-COVID levels, up noticeably from the trough of -75% in April.

INTERNATIONAL AIR TRAVEL

0

20,000

40,000

60,000

80,000

100,000

120,000

10-Jan-20 9-Feb-20 10-Mar-20 9-Apr-20 9-May-20 8-Jun-20 8-Jul-20 7-Aug-20 6-Sep-20

40% decline

Source: FlightRadar 24

Daily active commercial flightsweekly global average

9 edc.trade/economic-insights@PeterGHallXIII Peter Hall

ArtsEnterAcc&Food

TexTranWare

Auto&PPrinting

Misc TranFab MT

Prim MTOther

FurnPCP

AdminNMMAero

MiningMisc

CompuElec EQ

PlastMachinery

MgmtPaper

HealthWood

EducProfSciTech

WholsaleInfoCult

FoodConstruction

ChemPAD

UtilitiesAg

Real EstatBev

FinInsRetail

0% 20% 40% 60% 80% 100% 120%

GDP: THE PLUNGE AND THE JOURNEY BACK

Sources: Haver Analytics, EDC Economics

← extent of decline extent of recovery →

10 edc.trade/economic-insights@PeterGHallXIII Peter Hall

CONFIDENCE

Canadian jobs in “high-COVID-risk” sectors

Notes: 50+ = positive consumer sentiment. Consumer sentiment is weekly, aggregated monthly using last value. June value corresponds to the first week of June.Sources: Nanos Canadian consumer sentiment index, CFIB business barometer

Canadian confidence for businesses has rebounded towards more normal levels, while consumers remain cautious.

20

30

40

50

60

70

2014 2015 2016 2017 2018 2019 2020

Business

Business and consumer confidence indices (monthly)

Consumer

11 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Services sector employment, which held up reasonably well in past Canadian recessions,has been hit particularly hard, in areas such as restaurants, retail and recreation.

CANADA’S LABOUR MARKET

In GDP at risk

Sources: Haver Analytics, EDC Economics

-300 -250 -200 -150 -100 -50 0

Utilities

Finance, Insurance, Real Estate

Agriculture

Professional, Scientific & Technical

Forestry, Fishing, Mining, Oil & Gas

Educational Services

Health Care and Social Assistance

Public Administration

Business, Building & Other Support Services

Other Services

Manufacturing

Retail & Wholesale Trade

Construction

Transport and Warehousing

Information, Culture and Recreation

Accommodation and Food Services

Employment Changes, by SectorAugust 2019 to August 2020, Thousands

Goods and services employmentyear-over-year % change

-20

-15

-10

-5

0

5

2008 2010 2012 2014 2016 2018 2020

Goods

Services

12 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Food

Energy

Mining

Chem/plast

Autos/parts

Elec & elec

Machinery

Forestry

Aircraft & other

Consumer

Mining prod

0% 20% 40% 60% 80% 100% 120%

Changes to export shipments

QUEBEC EXPORTS: COVID IMPACT

Sources: Haver Analytics, EDC Economics

← depth of decline extent of recovery →

0% 5% 10% 15% 20%

Share of total export shipments, %

13 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Global Economic Outlook (GDP, annual % change)

2019

Developed countries 1.7

Canada 1.7

United States 2.2

Eurozone 1.3

Germany 0.6

France 1.5

Japan 0.7

Emerging countries 3.7

China 6.1

India 4.2

Brazil 1.1

Mexico -0.3

Total World 2.9

A NORMAL POST-GFC YEAR…

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, June 2020

14 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Global Economic Outlook (GDP, annual % change)

2019 2020*

Developed countries 1.7 -5.5

Canada 1.7 -5.8

United States 2.2 -3.4

Eurozone 1.3 -7.6

Germany 0.6 -5.6

France 1.5 -9.6

Japan 0.7 -5.6

Emerging countries 3.7 -3.6

China 6.1 1.7

India 4.2 -11.7

Brazil 1.1 -6.5

Mexico -0.3 -10.0

Total World 2.9 -4.3

…FOLLOWED BY DISASTER

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, June 2020

15 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Global Economic Outlook (GDP, annual % change)

2019 2020* 2021*

Developed countries 1.7 -5.5 5.7

Canada 1.7 -5.8 5.7

United States 2.2 -3.4 4.9

Eurozone 1.3 -7.6 7.0

Germany 0.6 -5.6 6.3

France 1.5 -9.6 8.9

Japan 0.7 -5.6 4.6

Emerging countries 3.7 -3.6 7.0

China 6.1 1.7 9.0

India 4.2 -11.7 16.1

Brazil 1.1 -6.5 4.0

Mexico -0.3 -10.0 5.9

Total World 2.9 -4.3 6.6

…AND THEN THE REBOUND

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, June 2020

16 edc.trade/economic-insights@PeterGHallXIII Peter Hall

Global Economic OutlookReal GDP Growth (percentage point change)

2020* 2021*

Developed countries -0.1 -0.4

Canada 3.2 -1.5

United States 1.7 -2.0

Eurozone -1.3 0.5

Germany -0.7 0.4

France -1.4 0.6

Japan -1.5 0.5

Emerging countries - -0.3

China 3.3 -1.0

India -8.1 5.0

Brazil 0.6 -0.2

Mexico -2.1 1.1

Total World - -0.3

CHANGES FROM PREVIOUS FORECAST

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, September 2020 relative to June 2020.

17 edc.trade/economic-insights@PeterGHallXIII Peter Hall

FINANCIAL MARKETS

Sources: Haver Analytics, EDC Economics; EDC Global Financial Markets.

0

2

4

6

8

10

12

14

0

2

4

6

8

Jan Feb Mar Apr May Jun Jul Aug Sep

EM Bond Spread (bps, rhs) U.S. Corp. Yield: B Rated (%, lhs)

-40%

-30%

-20%

-10%

0%

10%

20%

Jan Feb Mar Apr May Jun Jul Aug Sep

S&P 500 Emerging Markets TSX

Equity markets have largely recovered or surpassed their pre-COVID levels; while bond spreads are slowly improving, but remain somewhat elevated.

Global Stock Markets% change since Jan. 1

Global Debt Markets%

18 edc.trade/economic-insights@PeterGHallXIII Peter Hall

CURRENCIES AND INTEREST RATES

Global Economic Outlook 2019 2020* 2021*

Currency Exchange Rate

U.S. dollar USD per CAD 0.75 0.74 0.76

Euro CAD per EUR 1.49 1.53 1.55

Euro USD per EUR 1.12 1.13 1.18

Interest Rates, annual average

Bank of Canada, Overnight Target Rate 1.75 0.56 0.25

U.S. Federal Reserve, Fed Funds Target Rate (Upper limit) 2.14 0.39 0.10

European Central Bank, Policy Interest Rate 0.00 0.00 0.00

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, September 2020

19 edc.trade/economic-insights@PeterGHallXIII Peter Hall

COMMODITY PRICES

Global Economic Outlook 2019 2020* 2021*

Brent Crude Spot, USD / bbl 64.36 42.80 43.95

West Texas Intermediate, USD / bbl 56.99 38.65 41.13

Western Canada Select, USD / bbl 43.30 27.76 31.76

Natural Gas, USD / MMBtu 2.55 1.84 2.12

Gold, USD / troy ounce 1,392 1,806 1,920

Copper, USD / tonne 6,002 5,924 5,989

Note: * denotes the forecast period.Source: EDC Global Economic Outlook, September 2020

20 edc.trade/economic-insights@PeterGHallXIII Peter Hall

FIVE KEY TAKEAWAYS

Pandemic: containment is critical

Recovery: uneven

More virtual activity, mechanization

Re-shoring, near-shoring, glocalization: trade transformation

Costs, capacity, behaviour: how much change?

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Economic InsightsPeter Hall@PeterGHallXIII

22 edc.trade/economic-insights@PeterGHallXIII Peter Hall

POUR JOINDRE EDC

Diane Belliveau

Directrice régionale, Bureau de Québec

dbelliveau@edc.ca

François Houde

Directeur de compte principal, Beauce et centre du Québec

fhoude@edc.ca / 418-577-7412

edc.trade/economic-insightsPeter Hall@PeterGHallXIII