(Peter Hall – Export Development Canada)
Plunging crude oil prices have dramatically changed the economic growth landscape. Canada knows this all too well – anything related to oil seems to be in freefall, while outside of energy, industry is expecting a bonanza. The effect is being felt across the global macroeconomy. Oil exporters are counting their losses, while net importers are already projecting handsome dividends. As an imminent rebound is unlikely, how will the price plunge change world growth? And how is Canada expected to fare?
Let’s start with the bad news. Oil net exporters, like Canada, are bleeding cash. The biggest net exporter is Saudi Arabia, at 8.4 million barrels per day. At a world price of $60 per barrel, that’s costing them about $100 billion annually. Russia is second, with a net hit of $87 billion annually. The rest of the Middle East loses another $100 billion, with Nigeria and Venezuela also making the top list of money losers. Canada is feeling the pain, significantly, but industrial diversification is saving us from a far more negative result. If it is any additional solace, we don’t even make the top 10.
Panning through the extensive list of global net exporters, it is clear that while non-oil Canadian exports go to these destinations, with the exception of Russia, these account for 1.8% of total Canadian exports. In Russia’s case, exports are being hampered already by sanctions, and as such, are limiting the direct impact of the oil shock on trade activity. Overall, it’s not a great news story, as individual exporters that have had success in oil-rich markets will suffer. But on the whole, the net damage to Canada will be limited. As bad news goes, we’ve seen worse. Click here to read more.