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 abreast 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
The key theme for Canada's economy over the coming years will remain 'rebalancing', as private consumption and high oil prices can no longer be relied upon to provide robust economic growth.
Canada's 2015 federal general election remains the Liberal Party's to lose as polling data and recent election wins at the provincial level suggest momentum is with the opposition party.
A steady pick-up in external demand and exchange rate depreciation will continue to shrink Canada's current account deficit over the coming years.
Key Forecast Changes
We have revised our current account deficit forecast for 2014 from 3.1% of GDP to 2.8% as stronger exports suggest the goods trade balance will move into surplus.
Canada Industry Coverage (19)
Agribusiness Market Value BMI Market Value By Commodity (% of Total) (2010-2018)
BMI View: Grain production will fall in Canada in 2014/15, as logistical problems during the 2013/14 season have resulted in high stocks of wheat, corn and barley. The country's livestock industry is well placed to post strong growth in 2014/15 and beyond, while we believe that the Canadian beef and pork industries will gain the most from having signed the EU-Canada Free Trade Agreement in October 2013. The dairy management system, however, could be under pressure.
Sustained lower oil prices, and the likelihood of more to come, given OPEC's decision not to cut oil output, has exacerbated the outperformance of the Canadian light truck segment in the latter months of 2014. This also means our more optimistic scenario for the passenger car segment to achieve positive growth in 2014 is looking unachievable, following a 4.2% year-on-year (y-o-y) decline in November. While we expect the segment to post positive growth in 2015, this will be marginal and indeed our average annual growth forecast of 1% for the segment to 2018 means it will stay well below its 2008 levels of over 800,000 units.
In line with our expectations, light trucks continue their outperformance of the total light vehicle market, but even more so than expected as the promise of lower fuel prices drives sales. Segment sales for November were up 9.4% y-o-y and 10.3% in 11M14, which has prompted a slight upgrade to our light truck forecast to...
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. T he reduction in short term defence spending could cause delay s Â 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...
Food & Drink
Canada Food & Drink
BMI View : The Canadian economy will continue to expand at a steady pace, as household consumption growth will remain supported by easy monetary policy and a gradually tightening labour market. We forecast real private consumption growth of 2.0% in 2014, a slight moderation from the 2.4% growth recorded in 2013. However, unemployment remains at 7.0% , and the pace of job formation is noticeably lagging the US. Moreover, recent quarters have seen expectations point to gradually tighter credit conditions. Coupled with central bank efforts to engineer a soft landing of the housing market , this will likely see household spending growth moderate in the coming quarters. Beyond this year, we forecast private consumption growth to rise t o 2.3% in 2015 and 2.4% in 2016...
Canada Freight Transport
BMI maintains its positive outlook for Canada's freight transport sector for 2015. The country benefits from a strong commodities mix, as well as growing private consumption levels. In recent months, the country has benefitted from freight volumes being diverted away from US ports as shippers try to avoid both the US harbour tax and the chaos and delays caused by labour disputes at US ports.
Canada's economy will be driven by relatively strong household spending and higher fixed investment growth over the coming years. Slower fixed investment growth has previously placed most of the emphasis for economic expansion on private consumption and net exports of goods and services, providing a boost for freight volumes. Canada's diversified mineral base and its status as a top destination for mining firms seeking to raise funds on capital marketsÂ willÂ enable it to remain aÂ major player inÂ the globalÂ miningÂ industry.Â Indeed, theÂ countryÂ ...
Canada Information Technology
BMI View: Â WeÂ expect Canada's IT market to record growth of 3.2% in 2014, and forecast a CAGR of 4.1% 2014-2018. The maturity of the Canadian IT market means that growth rates will be markedly slower than those achieved by emerging markets in Latin America , but in terms of spending per capita Canada will continue to be one of the most lucrative markets globally. Â Premium consumer hardware will remain a growth area, with Apple expected to hold onto its prominent position, Â but over the medium term the areas we identify for outperformance include enterprise adoption...
BMI View: Â The Canadian construction sector is expected to recover from the weak year 2014, with real growth expected to lie at 2.77%. Due to the wider macroeconomic recovery and the New Building Canada Plan, 2015 as a whole is expected to see a return to growth across all sectors of the construction and infrastructure industry, including the residential and non-residential market which already showed signs of life in the past months.
For 2014, our construction industry value growth was revised down severely to 0.48%. We are expecting a strong recovery of 2.77% for 2015.
The residential sector remained weak in growthÂ over the course of 2014, however we expect improved economic conditions to help the sector return to growth of an estimated 2.56% in 2015.Â Infrastructure remains the primary driving force of growth.Â We do raise some concerns over the...
BMI View: Â T he latest news confirms our view that premiums in Canada ' s sophisticated and competitive insurance market will continue to grow at single digit rates - in both major segments. September and October have seen Â two major mergers in the life segment. We think that the process of consolidation will also continue in the non-life segment.
Canada provides a classic example of how premiums that are rising at low single-digit rates (in local currency terms), in a market where key metrics such as penetration (premiums as a percentage of GDP) are at quite low levels, do not provide the whole story. The latest news confirms our view that Canada's insurance sector is one of the strongest and most sophisticated of any that are...
Canada Medical Devices
BMI I ndustry View : Â Canada has a sophisticated and well established medical device market which ranks ninth in the world in terms of value. The market is e xpected to grow at a CAGR of 4.0 % over the 2013-2018 period . This steady growth Â should see the balance of trade deficit widen owing to Canada's reliance upon imports.
Headline Industry Forecasts
Canada's medical device market ranks as the ninth largest in...
BMI View: Â Canada's Â trade relationships with both the US and Mexico will encourage Â output growth in its metals industry to 2018, as the country remains a net exporter in refined metal . Increasing manufacturing and industrial activity in the latter two countries should help drive demand for metal inputs. Moreover , a weaker Canadian dollar against the US dollar should provide upside for Canadian exports. Â
Our forecast for accelerating economic growth in the US and Mexico, combined with our view that the Canadian...
BMI View: Â Canada 's diversified mineral base and well-developed capital markets Â will enable it to remain a Â major player in global mining production and financing . Indeed, the country will remain a top-ten global producer of zinc, lead, iron ore, nickel, copper, gold, silver, uranium and Â potash Â over the next five years.
Canada's advantages as a mining destination will persist in the coming years, enabling solid, if...
Oil & Gas
Canada Oil & Gas
BMI View: Â The outlook for Canada's oil and gas industry is still positive given the country's vast reserves, though upstream and midstream projects need more support from the community and the government to develop much-needed infrastructure.Â The greatest threat to these developments is the challenging project economics that couldÂ hamper the growth of oil sands-driven production, Â weighing on total hydrocarbon output. That said, while this dynamic presents a significant downside risk, we also note upside risks, with Â potential for Â exploration of the country's vast offshore Â acreage and unconventional resources to unearth more oil and gas reserves, supporting Canada's long-term growth prospects.Â
The drive to diversify feedstock is the main focus of the Canadian petrochemicals sector as it seeks to meet the challenge posed by new shale-based capacity in the US. BMI's latest Canada Petrochemicals Report anticipates continued growth in output in the shortÂ term, but that market diversification will be crucial to the industry's long-term success.
Over the near term, the focus for the industry will be on Nova Chemicals' plans to expand ethylene and polyethylene (PE) capacity as part of its 'Nova 2020' growth strategy, which is making extensive use of exploiting unconventional gas deposits in North America. Nova is engaged in efforts to increase supply for its crackers in Corunna, Ontario and Joffre, Alberta. Meanwhile, the company is expanding PE production capacity with 430,000-500,000 tonnes per annum (tpa) of linear low-density PE due to come onÂ stream in 2016 and the potential for a...
Pharmaceuticals & Healthcare
Canada Pharmaceuticals & Healthcare
BMI View: Â Canada's epidemiological profileÂ will continue to beÂ attractive to manufacturers of medicines for non-communicable diseases. Despite the relative ly rapid uptake of innovative pharmaceuticals, the burden of chronic conditions will increase over the next 15 years. Like many other developed states, Canada is introducing cost-containment measures to restrict the commercial opportunities presented to drugmakers.
Headline Expenditure Projections
Pharmaceuticals: CAD25.6bn (USD24.9bn) in 2013Â to CAD25.8bn (USD23.3bn) in 2014; +0.8% in local currency terms and -6.5% in US dollar terms. Forecast unchanged from Q414.
Healthcare: CAD204.3bn (USD198.4bn) in...
BMI View : Â Our fundamental assumptions of the market continue to be relevant and therefore our short- and long-term forecasts remain mostly unchanged.Â Although e conomic growth in Canada will gradually accelerate over the next few years , Â according to our country risk analysts the Â growth outlook for the country , remains b elow consensus expectations, reflecting BMI 's concerns about high household debt levels and declining commodity prices . With...
BMI View: Â On paper, Canada is an excellent candidate for non-hydro renewable development; with vast wind resources, plenty of land to construct wind farms, a national commitment to rid itself of coal fired electrical generation and a safe investment climate. But the country's constitutional arrangements, which leave emissions targets with the federal government and precise energy mix policies with provincial jurisdictions , have created a patchwork quilt of markets and policies across the country. Â Canada does provide opportunities, especially in the emerging in-stream tidal sector and wind, but is a laggard in adopting other renewable technologies at scale. Â However, the country is the world's largest...
BMI maintains its positive outlook on the Canadian port sector for 2015. We believe volumes at the country's ports will be driven by increased demand from the US and China for coal imports, as well as by shippers diverting volumes away from US West Coast ports. The ports will also benefit from continued expansion in private consumption. Several facilities have ambitious expansion plans, which will enable them to capitalise on increasing volumes. We expect GDP growth of 2.3% for Canada in 2015.
Headline Industry Data
2015Â Port Metro Vancouver tonnage throughput forecast to grow 2.4%. We project throughput to reach 161.7n tonnes in 2019.
2015 Port Metro Vancouver container throughput forecast to contractÂ 5.2% to reach 3.1mn twenty-foot equivalent units (TEUs). Over the medium term, we project throughput to reach 3.9mn TEUs in...
BMI View: Â Perhaps inevitably, no new significant players entered the Canadian mobile market as a result of the auction of 700MHz spectrum in early 2014. The three incumbent national players took the majority of the spectrum, with cable-focused Rogers laying claim to the most valuable properties in the hope of adding lustre to its converged services portfolio. Meanwhile, the government blocked the sale of spectrum , owned by defunct NextWave , to a Bell - Telus joint venture and reinforced its commitment to nurturing competition by blocking Telus' bid to acquire struggling new entrant Mobilicity ...