We expect an improvement in Canadian real GDP growth in 2014 and 2015, with expansion of 2.1% and 2.3% respectively (up from 1.7% in both 2012 and 2013). However, our forecasts are below consensus, and we expect domestic demand to come under pressure as overleveraged households take a breather, the housing market cools, and commodity prices fail to recover.
Canadian real GDP growth came in at 2.7% q-o-q annualised in Q3 2013, with consumption and business investment leading the way, and net exports dragging down the expansion. Subsequent monthly data suggest that growth in Q4 2013 is likely to have maintained the momentum, with car sales and purchasing managers' indices in particular pointing toward an above-trend quarter. We maintain our 1.7% real GDP growth estimate for 2013.
In 2014, the tonnage throughput picture is mixed in Canada. The out performer in purely year-on-year (y-o-y) terms is set to be Port Metro Vancouver (6.0%), while at the other end of the spectrum, the port of Montreal is expected to see the smallest annual rise (1.0%). Port Metro Vancouver will also enjoy the highest annual growth rate in box terms, with y-o-y growth pencilled in at 4.50%.
Headline Industry Data
2014 Port of Vancouver tonnage throughput forecast to grow 6.0%. We project throughput to reach 177.3mn tonnes in 2018.
2014 Port of Vancouver container throughput forecast to grow 4.50% to reach 2.95mn twenty-foot equivalent units (TEUs). Over the medium term we project throughput to reach 3.70mn TEUs.
Key Industry Trends
Short-Term Downside On Strike Action, But FTA To Boost Medium Term: In the short term, the Port of Metro Vancouver is battling industrial action, with a trucking strike at the facility set to negatively impact the port's operational throughput in 2014. The medium term outlook for the port is however looking much brighter, with the facility set to be one of the primary Canadian beneficiaries of a newly signed free trade agreement between the country and...