A number of our clients do business in Canada. It is one of the world's top trading economies, despite its relatively small population. Canada is a major exporter of commodities and food, and boasts expansive oil reserves. The country has strong trade links with the US and is increasing its trade with Asia. Our coverage – using our unique Total Analysis model – ensures that our clients make sound investment decisions in Canada. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We also provide in-depth analysis on 23 of Canada's most important industries. Combining interactive data and forecasting with our risk-assessed and results-proven analysis gives our clients the big picture they need. We are confident that you, as our client, will find doing business in Canada is made easy.
Canada Country Risk
Canada's proposed tax changes and previous emphasis on public infrastructure investment during the Liberal Party's election campaign will derail efforts to balance the federal budget by 2019 and see the ruling party's self-imposed CAD10bn deficit cap breached.
The impact of low oil prices on Canada's merchandise trade balance will increasingly be offset by manufactured goods exports, paving the way for the current account deficit to narrow over the coming years.
Canada's central bank will maintain the overnight rate at 0.50% until 2017 when stronger economic growth will prompt the beginning of a gradual interest rate hiking cycle.
Key Forecast Changes
Having previously forecasted a balanced budget by...
Canada Industry Coverage (21)
BMI View: The Canadian grains and beef sectors will be among the winners of the Trans-Pacific Partnership and these expanded export opportunities will support output growth to 2019. However, beef production will be constrained in the short term by tight cattle supplies. The dairy sector will remain shielded from imports and avoid output cuts, while sugar producers will face the threat of cheaper imports.
|Agribusiness Market Value|
|BMI Market Value By Commodity (2011-2019)|
|e/f = BMI estimate...|
BMI View: Low oil prices will start to weigh on the light vehicle market from 2016 as major provinces such as Alberta see demand declining. The production landscape, meanwhile, will shift toward higher margin models such as sport utility vehicles.
|Passenger Car and Light Commercial Vehicle Sales|
|f = BMI forecast. Source: Industry Canada, BMI|
The market will be near flat in 2016 as the effects of low...
Canada Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Defence & Security
Canada Defence & Security
BMI View: Canadian defence spending has been steadily increasing as the country has sought to address concerns over maritime sovereignty and the protection of natural resources. However, cost saving measures are being considered and in some cases implemented so that the long term goals are met. The reduction in short term defence spending could cause delays for certain much-needed procurements to bring the country in line with its NATO peers' spending in anticipation of deployments to counter ISIS movements.
Current plans are to upgrade, enhance and to extend the life of their current military technology. The CF-18 jet-...
Food & Drink
Canada Food & Drink
BMI View: While 2015 marks the nadir of Canada's oil-related economic slowdown, we project a low average growth trajectory over the coming years. This is because despite early indications that a weaker exchange rate and stronger US demand are driving up vehicle and consumer goods exports, there are no signs of higher fixed investment into Canada's non-commodities sector thus far. We forecast average annual real GDP growth of 1.7% between 2015 and 2019, in contrast to an average growth rate of 2.5% in the preceding five years. The food market is set to be an underperformer in Canada over our forecast period, with stronger growth in drinks and mass grocery retail.
Headline Industry Forecasts (local...
Canada Freight Transport
BMI View: We anticipate growth across all three freight sectors in Canada, with the rail sector achieving the highest levels of growth of 3.3% in 2016. This trend falls in line with signs of a general economic recovery in the country and growth in all key trade indicators, with total trade growing by 3.2% in 2016 and peaking at 3.5% in 2017. Canada will continue to trade primarily with the US and signs of economic recovery in the US should have a positive effect on demand for the country's goods.
We forecast real GDP growth of 1.5% in 2016, with business investment in machinery and equipment gradually replacing investment in the energy sector over the coming years. We forecast the weaker exchange rate and stronger US demand will see non-commodity goods exports rise and draw down inventories to an extent that businesses will step up their fixed investment in machinery and equipment,...
Canada Information Technology
BMI View: Our outlook for the Canadian IT sector has been positively revised and we are now more optimistic about its future growth prospects. We estimate that IT spending in Canada will grow by 3.1% in 2016 to reach a total market value of CAD63.7bn in local currency terms. We believe this will be driven by the software and services markets wherein which we envisage enterprise spending outperformance, including the adoption of cloud computing, Internet of Things, real-time software and services and big data analytics. Although the hardware segment has limited growth prospects it should be noted that Canada is a highly lucrative market due to high per capita incomes and a consumer preference for premium devices. Therefore, while it will not offer unit and top-line financial growth prospects, it will continue to offer vendors an attractive market with wider margins than the...
BMI View: The Canadian construction industry will recover in 2016 as the Liberal government spends big on infrastructure projects in a bid to stimulate the economy. The infrastructure and non-residential sectors will be the main drivers in growth over the next four years, offsetting declines in capital expenditure in the extractive sector and a slowdown in homebuilding.
Latest Updates And Structural Trends
We expect a recovery in the Canada construction industry in 2016, driven primarily by heightened public investment in infrastructure. The Liberal government of Prime Minister Justin Trudeau plans to double public spending on infrastructure over the next 10 years.
Following an estimated contraction of 1.8% for 2015, the construction industry will bounce back and post 2.7% real...
BMI View: Canada's insurance market is large and well developed, and benefits from the presence of some of the leading global insurers, particularly in the robust life sector. Supporting the insurance industry is a well-developed domestic financial market, access to international capital markets, and a strong regulatory environment which serve to make this an attractive investment destination. While currency fluctuations will result in short term declines in premiums when measured in US dollar terms, in local currency terms both the life and non-life sector will see sustained growth in premiums throughout our current forecast period through to 2019.
Canada Medical Devices
BMI Industry View : Canada has a sophisticated and well established medical device market which ranks ninth in the world in terms of value. The market is expected to grow at a CAGR of 4.0% over the 2014-2019 period. This steady growth should see the balance of trade deficit widen owing to Canada's reliance upon imports.
|Total (USDmn)||Per Capita (USD)||...|
BMI View: The Canadian metals sector will be supported in the years ahead by both an eventual recovery in domestic fixed asset investment and continued demand from US and Mexico. In particular, increasing manufacturing and industrial activity in the latter two countries should help drive demand for metal inputs. Continued weakening of the Canadian dollar against the US dollar should also support exports.
Stronger economic growth in both the US and Mexico over 2015, combined with a weaker Canadian dollar (CAD) in the coming quarters, will support growth in the Canadian metals sector to 2019. Indeed, we expect both the US and Mexico will experience positive trends in real GDP growth in the...
BMI View: Canada's mining sector will experience slow growth due to continued mineral price weakness. The country will remain a mining powerhouse, due to the country's vast mineral reserves and reputation as a world class destination for mining investment.
Oil & Gas
Canada Oil & Gas
BMI View: Our growth outlook for Canada's oil and gas industry remains modest given mounting headwinds in both the upstream and midstream sectors amid a low oil price environment. The greatest threats to these projects are unfavourable project economics and regulatory headwinds that will hamper the growth of oil sands-driven production and LNG terminal development, weighing on total hydrocarbon output. This is exacerbated by the likely drop in exploratory activity throughout Canadian acreage as companies revise capital expenditures in the coming year...
Canada's petrochemicals industry saw mixed results in 2015 with a contraction in the value of basic chemicals sales, but strong growth in rubber and plastic production. While domestic petrochemicals consumption is expected to pick up in 2016, this could be offset by slower growth in Canada's main export market, the US. There are added challenges of carbon pricing and the declining competitiveness of Canada's ethane-fed industry relative to naphtha-based rivals in Europe and Asia. Nevertheless, in the long term, the availability of ethane derived from unconventional resources should drive petrochemicals investment.
In 9M15, the value of plastic products shipped rose 7.4% y-o-y while rubber rose 2.9% y-o-y. Chemical capacity utilisation rates averaged 84.3% in H115, up 8.7 percentage points (pp) over H114, while plastic and rubber rates were at 82.6% and 84.7%, up 4.2pp and 2.0pp respectively. Higher operating rates and...
Pharmaceuticals & Healthcare
Canada Pharmaceuticals & Healthcare
BMI View: We expect the incoming Liberal government in Canada to implement countercyclical economic measures, which will be beneficial for the pharmaceutical and healthcare sector. Tax breaks and investment in the economy through higher spending on infrastructure programmes will provide support to higher household consumption, while healthcare expenditure in the private sector will continue to outpace public healthcare spending growth. Meanwhile, the ongoing economic rebalancing away from commodity exports will see an increase in investment in manufacturing and non-oil sectors in the next years, eventually benefitting some health industries. However, despite rising demand for healthcare and medicine, cost containment measures and the increasing uptake of lower value generic medicines will weigh on overall industry value growth.
Headline Expenditure Projections
BMI View : The election of Justin Trudeau as Canada's prime minister and the introduction of a strategy to curb carbon emissions in Alberta will strengthen Canada's shift away from coal-fired power and towards renewables and natural gas-fired power generation over the coming decade. Hydropower will remain the dominant technology in Canada's power mix through 2024, due to a vast pipeline of large-scale projects planned and under construction.
|f = BMI forecast. Source: EIA, National Sources, BMI|
BMI View: Falling exports as a result of declining oil prices and revenues have lead to currency devaluation and to a prolonged contraction in Canada's output over the last year. Nevertheless, household incomes are projected to grow in 2016-2019 thanks to rising employment and wages. The relative wealth of the Canadian consumer will continue to support stable and positive retail expansion and a diverse retail sector.
A sharp decline in Canada's export value caused by the oil price slump will be the key driver of the slowdown of the Canadian economy. We project that real GDP growth will decelerate from 2.5%...
BMI View: In Canada in 2016, we anticipate that the Port of Montreal will continue to lead in terms of growth at 4.90%, albeit a bit lower than 2015's estimate. The port of Prince Rupert will shorten its lead in terms of container throughput growth, with Metro Vancouver closing the gap. We forecast that there will be no negative growth figures in 2016 despite the knock-on effects of the slowdown in China and the possible repercussions on global economic instability.
Canada's economy looks set to benefit from trade with the US and increased deficit reduction in 2016, as investment in the country's shipping sector continues to strengthen its offering by enabling more...
BMI View: Following a series of high-profile spectrum auctions, subsequent spectrum trades and acquisitions, the Canadian market is set to resume its sedate pace of development. Although WIND Mobile is in a better position to become the country's long-awaited fourth national operator, its newfound private status means it may have neither the appetite or resources to capitalise on its circumstances. Meanwhile, established players remain focused on selling premium converged services .
|Organic Growth Elusive, Focus Now On Upselling|
|Canada Mobile Market Forecasts|
BMI View: Canada has a vibrant tourism market, benefiting from a variety of natural attractions and an extensive transport network. The market benefits from Canada's proximity to the US, meaning that US tourists make up a major proportion of visitors to Canada. As a result, the hotels and hospitality sector is well-developed and receives a sustained level of investment. We expect ongoing economic growth in the US to support tourism to Canada over the forecast period, ensuring ongoing expansion in the sector.