After five tough years, the global economic picture is starting to shape up for the better and Canada is well-positioned to take advantage of the new opportunities, according to David Newman, a transportation market analyst with Cormark Securities and the luncheon speaker at today's CITT conference.
Newman said from the outset that he was bearing good economic news and he delivered on several fronts.
Europe's economy is turning the corner at the same time as the US economy is improving and the Chinese economy is stabilizing at a lower but still robust growth level, Newman said. India is continuing to develop and Mexico is gaining momentum.
"What we are hoping is for all to align at once – synchronous global growth," he said, adding he is expecting global growth around 3% next year.
Canada stands to profit from such synchronous global growth, Newman said, because it has the base metals, energy products and agricultural products required to feed the demand of an expanding world economy.
"We have what the world wants and we stand to benefit," Newman said, pointing out Western Canada with its strong raw materials base is particularly well positioned.
The growth in manufacturing is good indication of what's to come. Manufacturing around the world expanded in October and US manufacturing is at its strongest in 2.5 years. US auto sales are almost at pre-recession highs. They were at 16 million in 2007 and are expected to hit 15.7 million in 2014 and 16.2 million by 2015.
US Housing starts, although nowhere near their peak levels from prior to the recession, are nevertheless continuing to recover and unemployment is down to 7.2% from the 10% peak during the recession and US consumer confidence peaked in June.
In Canada there are concerns about a correction in the condo market but the single family house market should be safe.
"It's unlikely we will witness a US style meltdown. It's not going to happen," Newman said due to the much stricter Canadian lending rules.
Canadian unemployment is down to 6.9% from the peak of 8.7% back in August of 2009.
Newman forecasts GDP growth of 2.5% to 3.0% for the US and a more muted 2.2% in Canada for 2014.
"We are near recovery mode. Nowhere near the peaks of the past but we are on the right track," he said.
