U.S. exports maintained Canada as the top destination in 2023, according to statistics released Wednesday by the Census Bureau. 

The United States exported products to the Canadian market with a customs value of $353.235 million in the past year, down 0.9% compared to 2022.

Moving forward, Export Development Canada (EDC) expects Canada’s economy to experience below-trend growth in the first half of 2023. 

In the third quarter, Canadian households spent more than 15% of their disposable income on debt payments as interest rate increases hit their households. 

While EDC expects the Canadian economy to remain fragile early in the year, it does not anticipate a recession or widespread job losses, with annual growth of 0.8 percent. 

In its view, stronger growth in the second half of the year and a stronger global economy will boost growth to 2 percent in 2025.

Thus, Canada’s economy will slow this year as high interest rates continue to weigh on over-indebted households and drag down business spending. 

Weaker external demand will also contribute to Canada’s overall economic outlook.

U.S. Exports

Both countries have a significant trading relationship, with substantial bilateral exports and imports. 

In the U.S., according to EDC, consumers will continue to spend, albeit at a slower pace, as excess savings finally dry up with higher prices and interest rates, and pent-up demand runs its course. 

Also, higher costs are limiting the spending capacity of businesses, which means that the pace of job creation and wage increases will continue to slow. 

Outlook

A weaker consumer, coupled with slower global growth, will soften the U.S. outlook for 2024, generating EDC-estimated growth of only 1.2 percent. 

EDC predicts U.S. activity to pick up in the second half of 2024, bringing growth closer to trend in 2025, 1.8 percent.