OTTAWA - The next decade will bring major changes and a bit of deja vu for Canada's economy, including the return of Western power, a loonie flying above par and surging stock values, says a new report.
But the major change is that Canada's economy will be less dependent on consumers or the United States, says the Canadian Imperial Bank of Commerce (TSX:CM).
Instead, the bank says China and major oil exporting countries will increasingly taken on the role of the world's spenders, while the United States, and to a lesser extent Canada, ramp of savings rates.
In fact, CIBC chief economist Avery Shenfeld says increased spending in the emerging economies could add far more to global consumption than will be lost to higher savings rate in the U.S., Canada and other advanced industrialized countries.
Canada's economy will get a boost from exports, particularly commodities, whose prices will get back some of their lustre as demand in emerging markets grows.
Meanwhile, the U.S. currency will tumble by about 20 per cent, in part because the Federal Reserve's quantitative easing policies are massively increasing the supply of dollars.
That, in turn, will push the loonie above the U.S. dollar again, damaging central Canada's manufacturing sector but boosting the West's resource sector.
Rising resource prices will reignite capital-intensive development of the oilsands, natural gas projects and metal mines, the report states.
One sector that won't bounce back as strongly is housing. The report sees housing starts averaging a tame 170,000 in the next decade, after being above 200,000 for most of the current decade.