Jan 18 2019
Though 2018 may now be behind us, the year left in its wake, consternation about global growth, international trade flows and disappointing earnings. To counter the potentially grim outlook, IBISWorld has highlighted a collection of industries forecast for growth in 2019 despite these external uncertainties. From cannabis production to soybean farming and language instruction, the Canadian economy is expected to elevate unevenly, with strong momentum from these far-flung industries.
A budding industry, cannabis production has been lifted by the October 2018 deregulation of domestic cannabis consumption. As the first G20 economy to legalize marijuana, Canada is in a particularly strong position to cultivate a cannabis infrastructure that can not only supply the world’s burgeoning medical marijuana market but also the demand for recreational products, if and when other countries legalize it, in turn. In 2019, the Cannabis Production industry in Canada (IBISWorld report 11141CA) is anticipated to expand 68.4% to total $1.5 billion, with consumer demand skyrocketing as the country solidifies its cannabis distribution and retail network. In particular, major players such as Tilray Inc., Aurora Cannabis Inc. and Canopy Growth Corporation are preparing an international cultivation infrastructure to supply this burgeoning global market bereft of major multinational competitors. However, recent supply constraints are expected to hamper more profound growth until nascent operators gain footing, since marijuana takes time to grow, harvest, cure and process, producing a lag in sales for newfound enterprises.
E-Commerce and Online Auctions
The disruptor of the retail sector, the e-commerce industry has been a major transformative force worldwide, and Canada is no exception. With an estimated market share of 61.3% in 2018 (latest data available), major player Amazon Inc., is the primary driver of industry growth, and its domestic expansion in recent years is anticipated to support the Canadian E-Commerce and Online Auctions industry (45411aCA) through a series of investments in domestic operations. In 2018, Amazon announced the construction of a technology hub in Vancouver, BC, and two warehousing centres in the Greater Toronto area in Ottawa and Caledon, ON. Canada is increasingly becoming a bastion of demand for e-commerce with a projected $69.6 billion total online retail market in 2019, according to research firm eMarketer. Accordingly, Amazon’s first-mover advantage and continued investment in the domestic landscape are expected to shape the industry moving forward, contributing to an expected 8.1% growth in industry revenue to reach $8.7 billion.
Storage and Warehouse Leasing
Parallel to gains in the e-commerce realm, a widespread need for storage and warehouse space is essential to a rise in online retail, alongside the sustained climb in disposable income and consumer spending, which have fuelled retail sales in recent years. Self-storage spaces have been a mainstay of consumption-based economies, particularly in the United States, and a robust Canadian economic landscape has bolstered consumer spending and therefore an accumulation of possessions that merit extra storage space. Also, an increase in self-storage facilities being thought of as an investment among real estate investment trusts (REITs) in the United States and Canada has underpinned recent growth in the Storage and Warehouse Leasing industry in Canada (53113CA). Typically seen as a way to diversify REITs, particularly in a moment of uncertain housing market developments, with an anticipated cooldown across North America in 2019, demand for storage facilities from both regular consumers and REITs is forecast to grow 7.9% to reach $980.2 million this year.
Heavy Engineering Construction
A rebound in capital expenditures in 2017 and 2018, as the federal government finetuned its infrastructure goals, instigated a litany of construction projects nationwide. Capital expenditures plummeted over 2015 and 2016 amid a collapse in commodity prices that precipitated a brief recession. Since then, the federal government has been committed to improving the country’s infrastructure by closing gaps in funding, supporting the Heavy Engineering Construction industry in Canada (23799CA). In 2016, the federal government implemented the Investing in Canada Plan, a 12-year, $180.0-billion funding scheme to support provincial, territorial and municipal projects. While other infrastructure plans have been implemented in the past, this plan differs from previous initiatives through its longevity, comprehensiveness and the size of its budget, which is more than double than that of the previous infrastructure strategy. Though enacted in 2016, lead times for heavy engineering projects are significant, causing a lag in industry revenue growth. Accordingly, industry revenue is projected to increase 6.1% in 2018 and 7.4% in 2019 alongside infrastructure development initiatives that are anticipated to come to fruition.
Primary Care Doctors
Growth forecast, stat! Primary care doctors (62111aCA) are the first line of defence for preventative and reactive healthcare domestically. As a result, broader healthcare funding and demographic trends are catalysts for industry vitality. The majority of healthcare expenditures is funded by the government while just under one-third of health spending is from private insurers and out of pocket expenses, according to the National Institute of Health Information. Thus, a projected 1.9% rise in government expenditures should prop up the industry in 2019. Plus, an aging population translates into growing demand for geriatric and chronic condition treatments, supporting primary care doctor visits. All in all, an expected 3.4% increase in healthcare expenditure is anticipated to compound positive demographic shifts, which is expected to contribute to a 6.9% spike in industry revenue in 2019 to total $36.3 billion.
The most traded crop in the world, soybeans are an integral part of a modern economy. Domestically, the federal Renewable Fuels Regulations program aims to increase the use of biofuels in Canada. As long as soybeans remain one of the two primary inputs used in blended fuel production, demand for soybeans from alternative fuel producers will continue to expand as the mandated target increases. In addition, the trade spat between the United States, the world’s leading exporter of soybeans, and China, the world’s largest importer of soybeans, is expected to give Canadian soybean farmers an opportunity to thrive. Year-to-date trade figures demonstrate the vibrancy of this opening. For the first 11 months of 2018, soybean exports to China rose 62.3% compared with the same period in 2017, chiefly as a result of US trade tensions. As this struggle continues to upend global trade flows, revenue for the Soybean Farming industry in Canada (11111CA) is projected to climb 5.3% to reach $4.4 billion in 2019.
Motorcycle, Bike and Parts Manufacturing
Led by major player Bombardier Recreation Products Inc. (BRP), Canada’s Motorcycle, Bike and Parts Manufacturing industry (33699aCA) is anticipated to accelerate, after posting speedy gains over the past five years. The fast-paced growth during the recent period is primarily attributed to BRP’s strong expansion, with the company capturing an estimated 28.5% of the market in 2018 (latest data available). Meanwhile, a forecast expansion in consumer spending in 2019 alongside a favourable economic climate is projected to boost consumers’ discretionary expenditures, including motorcycles produced by the industry. The inertia from the past five years alongside BRP’s strong expansion and a steady rise in consumer spending are projected to lead to a 5.3% spike in industry revenue over 2019, with total industry revenue expected to exceed $1.4 billion.
A comparatively small industry with a forecast valuation of just over $260.0 million this year, the Language Instruction industry in Canada (61163CA) is expected to grow in line with an increasingly globalized domestic economy. The requisite language proficiency for dealing with international clients, particularly amid the federal government’s aggressive pursuit of trade agreements worldwide, is the primary driver of language instruction activity. While consumer-level language instruction is significant, corporate clients are the largest facilitators of industry growth. Thus, levels of corporate profit are important indicators of industry health since healthy bottom lines encourage employee development programs, including language proficiency. With an anticipated 5.9% jump in corporate profit in 2019, industry revenue is projected to climb 5.1%, aided by globalization endeavours and healthy bottom lines.
After years of foreign competition chipping away at domestic production, Canada’s Computer Manufacturing industry (33411aCA) has adapted. The industry used to generate over $2.5 billion in annual revenue back in 2003, falling to a nadir in 2012 before beginning a recovery in recent years as contract manufacturing became more popular. Many previously relocated manufacturing operations, both within and outside of the industry, have begun an exodus back to Canada in a stripped-down form, with final computer assembly or component integration undertaken domestically before final consumption in Canada or the United States. Also, specialized computer applications, such as industrial computer systems, have been a focal point of domestic operations, helping to stave off a continued decline. Accordingly, from its historically low base in 2012, industry revenue is anticipated to approach $900.0 million in 2019, growing an estimated 5.0% this year as specialized manufacturers continue to gain salience in their niche markets.
The domestic Jewellery Manufacturing industry (33991CA) has been primarily focused on the production of coins, with the Royal Canadian Mint (RCM) capturing more than one-half of industry revenue in 2018 (latest data available). Indeed, 54.5% of industry revenue is derived from coins alone, compounding RCM’s dominance in the domestic sphere. RCM produces coinage for nearly 90 countries worldwide, and is therefore fully entrenched in the ebb and flow of global commodity and currency markets. In particular, during a moment in which market uncertainty and trade tensions have roiled economic outlooks worldwide, jewellery is an attractive safeguard of value, helping to craft a bullish outlook during current turbulence. Plus, a forecast 5.9% climb in the world price of silver is projected to bolster final selling prices. Ultimately, concerns about global economic growth, the deceleration of US federal interest rate hikes that has helped to depress the value of the US dollar and rising prices for precious metals are anticipated to boost industry revenue 4.8% in 2019 to total more than $2.3 billion.
A murky economic outlook globally can be assuaged to a degree by looking at the growth opportunities available in the quagmire of current international conditions. Other notable growth forecasts include the Credit Unions (52213CA), Market Research (54191CA) and Scientific and Economic Consulting (54169CA) industries in Canada. In contrast, the quickest declines are expected to be posted in the Recyclable Material Wholesaling (41810CA), Greeting Cards and Other Publishing (51119CA) and Automobile Engine and Parts Manufacturing (33631CA) industries in Canada. The relatively mature professional services sector is expected to continue to drive steady economic expansion in upcoming years, although the youngest industries are expected to lead the pack in 2019.
Edited/Designed by Tafannum Rahman