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Sask. plays role as world economy recovers

May 30, 2013 | 6:10 AM

The world economy is recovering and Saskatchewan is participating.

That was the message from Peter Hall, vice-president and chief economist of Export Development Canada (EDC), at a business luncheon in Saskatoon Wednesday.

“We have three times seen the world economy start to get back on its feet only to fall back again to mediocre growth, so this is number four.”

Hall, who emphasized that growth was stalled for good reasons in the past and EDC believes it's the “real thing” this time around.

Hall said a key indicator is the housing revival in the United States.

“It's telling us we're in for some very big growth.”

But this growth isn't just in America and it's not just for Canadian or Saskatchewan exports to America, it's an engine that is actually getting the whole world economy going, Hall explained.

The EDC 2013 forecast for the global and Saskatchewan economies is very broad based, said Hall.

The energy sector is expected to grow by eight per cent due to more oil throughput, rising natural gas prices and uranium prices.

“Saskatchewan is on the radar screen because everyone is talking about shale, oil and gas at the moment,” Hall said.

“It's becoming more understood across the country that there is a huge amount of these resources that exist in the province.”

As the middle class in emerging markets grows phenomenally every year, the first place that that puts pressure is on the food supply.

“All of a sudden, all eyes are on the bread basket of the country, Saskatchewan. In terms of what this province can be selling to the rest of the world,” said Hall.

Around 25 per cent of the trade that goes out of the province goes to emerging markets, a very high ratio compared to the rest of Canada, Hall said.

But he added that an issue he is seeing is on the transportation side of things. Hall said there isn’t enough infrastructure to accommodate all of the stuff that we could be sending to the rest of the world.

When it comes to the Canadian dollar, the EDC has a non-traditional forecast.

“We actually see it going down,” said Hall.

Because of the liquidity situation in the world, a lot of people are investing in commodities now because they have nowhere else to park their money.

Normally in a recovery period we would see commodity prices go up and we are commodity currency, he said.

But once we get back to our regular growth cycle and regular investments, that money is going to go back to regular activities and it's going to come out of commodities.

“So we actually expect to see commodity prices go down in the growth cycle, and as a result of that our dollar will go down as well,” said Hall.

EDC expects the Canadian dollar to drop to 97 cents U.S. this year, 96 cents U.S. next year and 2015 and beyond around the 95 cent U.S. level.

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