One of Canada’s largest financial institutions, CIBC, has shown that the Canadian economy is becoming less and less dependent on the American economy for its exports, making up the difference by selling to emerging markets to sustain its growth.
In just the last 10 years, Canadian exports to the US have declined 30%, quite a huge number of what used to be the most important trading partner for Canadian businesses, which represents a slip to levels before NAFTA was put in place.
While the US is still a significant source of Canadian export revenue, accounting for an enormous 75% of exports, this number represents a significant decline, and if trends are set to continue, this number will drop to 60% in another 10 years. The vast majority of the declineâ€"â€"90%â€"â€"has been shouldered by moving those exports over to emerging markets.
Though several factors figure into this shift, quite notably the decline of US economic dominance and internal stability, paralleled by the rise of emerging markets such as Brazil, China and India, among others, the result is likely to continue. The current economic climate in the United States is rather discouraging, and a great number of economic analysts have claimed it will likely continue for quite some time. As China and India become ever more important players on the international stage, it appears quite unlikely that any reversal of this trend is likely to be seen in coming decades.
Emerging markets, China in particular, were the first to emerge from he 2007 recession, and their growth trends seem likely to continue for quite some time, given certain caveats. It seems inevitable to a great number of people that the US economy will be less and less of a economic powerhouse; significant, still, but no longer the determinant of global economic patterns. With China set to become the world’s number one economy by approximately 2020, most countries have been embracing the shift, if out of necessity if nothing else, to keep their own markets afloat.
The CIBC reports specific plans to adapt to new global patterns, such as the liberals’ plan to embrace clean energy initiatives, compared to the conservatives’ plans to sustain a free market approach to adapt to the oncoming challenges without coordinated government planning.
The bigger picture, however, is one of a global evolution toward what Russian officials in particular have described as a mulit-polar world, in which the economic demands of a single county cannot overpower the globe to the degree that its leadership must be met on its own terms. Though it is quite clear the sun has yet to wane on the American economic position, it has also become clear that diversification has become the preferred method for industry leaders and investors, as opposed to relying increasingly on a single economy to do business.
This is a trend that is likely never going to reverse, as the patterns working in favor of emerging markets appear rather permanent, given the pace of technological and educational developments that will further empower those populations to became part of the broader economy. The economic outlook for the United States is bleak; most estimates show that, even with extraordinary improvements in employment rates, it will take half a decade to reach pre-recession unemployment levels. And the bad news is that the US is not even close to meeting those targets. The CIBC report is thus likely the beginning of the trend, not only of Canadian businesses, but others as well, that will increasingly seek to diversify in the coming years.
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