(February 1 – 10:10 ET) – TD Bank economists say the U.S. economic slowdown spells difficult times for Canadian auto producers this year.

TD says that after several strong years, Canadian auto production is forecast to fall by 7% in 2001. “The downturn in this key industry will dampen Canada’s economic growth this year,” says Craig Alexander, senior economist at TD. The motor vehicle assembly and parts industry still employs 240,000 workers, and represents 2.5% of GDP, so any downturn in North American demand represents a serious economic threat. Including auto inputs, a conservative estimate of auto and related industries puts their total output at around 7% of GDP.

Ontario accounts for 97% of Canadian light vehicle production, and so the province will feel the brunt of the weakness in the auto sector. Motor vehicle assembly and parts industry alone represents 5.5% of provincial GDP, while including related industries lifts the share to 10.5%.

“The direct impact of the forecasted decline in motor vehicle production will reduce Canadian economic growth this year by roughly 0.5% and cut Ontario’s economic growth by a full percentage point,” Alexander notes.
-IE Staff