Already at an all-time high, Canada’s commodity prices may have further room to run, says National Bank Financial Inc. (NBF).
In a research note, the firm reported that the Bank of Canada’s index for commodities produced in Canada and sold on world markets has reached a record high this year (in Canadian dollar terms). The index covers 26 commodities across the energy, metals, forestry, agriculture and fishery sectors.
While the effects of the omicron variant pose a short-term obstacle, NBF said it expects global industrial production to reach “new highs” in 2022.
“Even though we expect a slowdown in production in the coming weeks as countries implement measures to control omicron, the impact on growth could be relatively short, as this new variant appears to be less virulent than previous ones,” the research note said.
Consumer spending should remain strong in developed countries, it said, driving global industrial production.
“This means that commodity prices are likely to stay high and possibly rise further,” it said.
This would support the Canadian economy, it noted, as higher commodity prices are “good for the trade balance, profits, job creation and the Canadian dollar.”