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Trump's win was an "orange swan" event for emerging markets.
Financial markets are likely in for a bumpy ride in the coming years -- what we now see is perhaps a foretaste. Hiding from the ups and downs isn't likely an option. Looking for this period's manifold opportunities could actually be exciting.
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A weaker Canadian dollar poses a threat to imported inputs to Canada's production machine, and to future Canadian investments abroad. But the soaring U.S. dollar isn't the only currency in play. Movements in other currencies are less dramatic. Perhaps this is an opportunity to scan the globe both for inputs to our production process and for direct investment undertakings in less-traditional markets.
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How is Canada faring in our industrial diversification? Progress on trade diversification over the past 15 years is likely one of the most remarkable developments in Canadian economic history. A strong dependence on traditional markets was only enhanced by the Canada-US FTA, which saw exports to the US soar to over 85 per cent of the total. But a big shift began in the New Millennium.
Recently there is an increasing need for exports to be built into the growth strategy of any business. Without exports, businesses, whether they are small businesses or multinationals, increasingly risk their long term health and prosperity by ceding rapidly growing markets and brand awareness to up and coming competitors over the long term.
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The New York Declaration on Forests represents an unprecedented effort by developed and developing countries to partner around a shared goal of ending global forest loss and committing to a concrete timeline to realize their goal to accomplish this goal.
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The tech wreck, the thickening border with the U.S. and the soaring loonie in the mid-2000's turned the attention of Canada's exporters to fast-growing emerging markets. In a relatively short time span, our trade with this rapidly-rising part of the global economy has risen from less than 5 per cent to almost 13 per cent of our merchandise exports.
We expect developing markets to re-emerge. They've gone quiet in the past couple of years, weary of waiting for the world's large economies to get going again. Their recent record has persuaded pundits to throw them into the 'new normal' soup.
Just over a year ago, markets went into a tailspin. At that time then-Fed Chairman Bernanke made what was supposed to be a benign announcement that gave new meaning to the word "taper." Currencies were thrust into the mayhem well ahead of the statement becoming action, as markets tried to anticipate the pricing effects of this new monetary regime. Tapering is now well underway; how are currencies weathering the storm?
Cash has been plentiful in emerging markets. Between 2009-2012 as quantitative easing ramped up, there was a massive expansion in borrowing on global bond markets by emerging market (EM) sovereigns, banks and companies. As a result, EM economies are now closely integrated into global debt markets, and thus more affected by actions taken in Developed Markets (DMs), particularly the withdrawal of quantitative easing (QE).
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Canada will see timely benefits as global trade picks up. Prospects for the domestic economy are not strong, but exports are already rising nicely. Domestic weakening should help to free up capacity for exports, which is running pretty tight in some industries. In others, there is capacity to absorb growth.
The world is getting hungrier. It has been said many times, but it bears repeating: the rise of emerging markets over the past three decades is now vaulting millions into the ranks of the middle class every year.
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When international trade collapsed in 2009, the Canadian economy turned inward, and for a change, discovered a steady source of growth. That source is now tapped out, and economy-watchers have for some time turned their eyes back to trade. So far, the view has been uninspiring. Will Canadian trade carry growth forward, or is our hopeful gaze in for a big disappointment?
Canadian investors are well-known in Colombia, particularly in the oil and gas sector. The crisis proved to be a setback to impressive investment activity, but it has since rebounded. Canadian direct investment in Colombia is now over 70 per cent higher than at the 2008 peak, at just under $1.8 billion.