In this week’s EconMinute, we’re talking about trade prices and volumes.
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Canadian exports are on pace for a record year. From January through April, exports have totalled $246 billion—22% higher than the same four months in 2021, which itself was a record year. This is excellent news for a country that relies on foreign sales to generate economic growth.
At the same time, many of Canada’s most important trade products are resource-based goods; and commodity prices around the world are surging. So how much of our soaring exports is because we’re producing more? And how much is because we’re getting higher prices for what we’re already selling?
The numbers show that recent trade growth is almost entirely because of higher prices.
- The volume of goods exported from Canada has been flat for years, and is actually 6% lower than it was two years ago.
- Meanwhile, export prices are up 34% over that same two-year period, and have risen by 45% in the past 12 months.
This trend holds across a wide range of products. In nearly all cases, price increases have significantly outstripped growth in trade volumes.
- Forestry, agri-food and metal/mineral products have all seen export volumes decline, but the drop was masked by higher prices for the goods businesses did sell.
- Motor vehicle and aerospace export volumes have also fallen steeply, but with minimal price increases to cushion the blow.
- Consumer goods is the only export category where both prices and volumes have increased significantly over the last five years.
High prices for oil, metals and agricultural products are a huge benefit for exporters of those goods. However, the fact that overall export volumes are flat is a concern and could reflect on the country’s broader economic competitiveness challenges.