show you what ’ s at stake with a robust export recovery. and i ’ ll close with some thoughts on how we can improve the odds of bringing this about. comparing crises the global financial crisis pummelled the world economy back in 2008 and 2009. but canada fared relatively well because of our strong financial system. our recession was shorter and shallower than in most other economies. but our exports were hit hard — indeed, harder than most. that ’ s because of our close ties with the united states, which was the epicentre of the crisis. while global exports fell by less than 20 percent, canadian exports fell by close to 30 percent. as is usually the case in recessions, demand for goods was particularly affected. canada swung from having a large trade surplus in goods to a small deficit. ( chart 1 ). chart 1 : canada's trade balance has been negative since the global financial crisis ( quarterly data, seasonally adjusted annual rate ) can $ billions - 20 - 40 - 60 - 80 goods source : statistics canada services total trade last observation : 2020q3 canadian exports began to recover immediately after the crisis, but the rebound stalled. weak foreign demand, particularly from the united states, was holding exports back. but that wasn ’ t the whole story. bank of canada researchers spent a lot of time dissecting these disappointing exports and zeroed in on two fundamental issues : geography and competitiveness. two - thirds of canada ’ s underperformance was blamed on geography — who we trade with. canadian export markets were concentrated in mature economies with relatively slow growth, such as the united states, rather than faster - growing emerging - market economies, largely in asia. the remainder of this poor performance was tied to a lack of competitiveness : unit labour costs in canada were higher than elsewhere because of slow productivity growth and - 3the impact of a stronger currency. canada ’ s regulatory regime and investment climate were also cited as impediments. 1 now let ’ s look at how this past experience compares with today. while the period leading up to the global financial crisis was positive for trade, the period before the pandemic was anything but. trade disputes arose between the united states and several other economies, including canada, the european union and particularly china. these disputes led to escalating tariffs and pervasive uncertainty about global policy. bank researchers estimated that these factors combined would reduce global output by more than 1 percent — that ’ s more than $

: $ 53 billion - 10 - 20 - 30 upside note : assumes no policy rate reaction downside last data plotted : 2024q4 in reality, the outcome will probably fall somewhere between the two extremes. obviously, we all hope that real life turns out closer to the optimistic scenario than the pessimistic. but hope is not a strategy. we need to think strategically to increase the odds of a strong trade recovery. markets for our products business leaders and policy - makers each have important roles to play. they need to work together to leverage, broaden and deepen global markets for canadian products. thanks to the signing of the canada - us - mexico agreement, the comprehensive economic and trade agreement with the european union, and the comprehensive and progressive agreement for trans - pacific partnership, canada already has some of the best market access in the world. further, we have numerous bilateral trade deals in place. the business community and governments across canada need to work together to leverage these market opportunities. the business community can capitalize on this market access by investing in people and in productive capacity. we know canada has an incredibly diverse workforce — people have come from around the globe to live here, bringing their global connections and knowledge with them. and we ’ ve seen clear evidence researchers add an estimate of the impact of the reopening of the oshawa auto plant in the optimistic scenario. - 7that shifting populations can drive trade. 4 smart companies can leverage canada ’ s workforce advantage to build global markets for their products. companies can also look to global supply chains for growth opportunities. supply chains are trending toward more regional networks around major global trade hubs. global companies invest in the resilience of their supply chains through diversification of suppliers or production locations, and through digitalization and automation. canadian companies need to seize these opportunities to be part of the solution. as policy - makers and business leaders, we have the responsibility to explain the importance of rules - based trade. we need to push for a renewal of the spirit of internationalism that served so many countries well for decades. and we need to make sure that the benefits of open trade are shared fairly within and across economies. with covid - 19 accelerating the digital economy, rules for digital trade and competition are more critical than ever. this also highlights the urgent need for a concerted, internationally coordinated effort to improve the ability to measure the digital economy. this is a priority for statistics canada, but much more work remains, and