To help you understand what is going on in trade globally, and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
The recent uptick in global trade won’t last long. World goods trade rose 0.4% in August from July, adjusted for inflation. Trade has barely budged since February and it’s now 4.4% below its peak in September 2022. The new-export-orders component of the global manufacturing purchasing managers’ index (PMI) remained below 50 in September. This suggests that worldwide demand for exports is weak and still contracting.
Trade will continue to fall as economic growth around the world cools. Several advanced economies will likely fall into a mild recession or at least a stretch of very weak GDP growth later this year, which will weigh on demand for traded goods. With a lot of the hit from higher interest rates still to come, demand for goods, particularly high-value goods such as autos and furniture, should weaken, given that spending on such items tends to be more sensitive to interest rates.
Against this global backdrop, the Canadian economy is weakening amid mounting headwinds. Initial data show that Canada’s GDP rose 0.1% in August from the previous month, following near-zero growth over the prior six months. The main bright spot for Canada has been the labor market, which continues to add jobs, keeping the jobless rate low.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Still, the odds favor a slowdown for Canada, not a recession. Several factors will weigh on the economy for the rest of the year. Variable-rate mortgages, which are common there, have pushed up households’ financing costs recently. Interest costs are 9% of disposable incomes, which is high by historical standards. The business outlook is bleak, as declining profit growth crimps corporate spending.
The Bank of Canada is open to further rate hikes if inflation stays too high. It stood pat in October but said it is ready to raise rates further if prices don’t cool off.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
-
Stock Market Today: Cautious Investors Let Stocks Drift LowerMarkets weigh encouraging trends for earnings and tariffs against concerning signals from U.S. consumers.
-
A Smart Way to Combat Economic RollercoastersSavings With rates on CDs remaining high for now, a CD ladder allows you to maximize your returns with flexibility to your cash when you need it.
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
-
What DOGE is Doing NowThe Kiplinger Letter As Musk's DOGE pursues its ambitious agenda, uncertainty and legal challenges are mounting — causing frustration for Trump.
-
A Move Away From Free TradeThe Letter President Trump says long-term gain will be worth short-term pain, but the pain could be significant this year.
-
Trump’s Whirlwind Month of Crypto MovesThe Kiplinger Letter The Trump administration wants to strengthen U.S. leadership in the cryptocurrency industry by providing regulatory clarity.
-
What Could Derail the Economy This Year?The Letter While the outlook for the U.S. economy is mostly favorable, there are plenty of risks that bear watching.
-
Three Ways President Trump Could Impact the EconomyThe Letter Some of Trump's top priorities could boost economic growth, but others risk fueling inflation.
-
10 Predictions for 2025 from The Kiplinger LetterThe Kiplinger Letter As 2025 arrives, here are our top 10 forecasts for the new year.
-
Europe Faces Economic and Political Headwinds Next YearThe Letter Challenges for Europe: Potential tariffs, high energy prices and more competition from China will weigh on the bloc in 2025.
