November 10, 1004 CALGARY -- Lower energy prices are forecast to pull Alberta's exports down by 5 per cent in 2005, according to a provincial export outlook from Export Development Canada (EDC). "Alberta's export growth will be restrained by falling energy prices in 2005," says EDC senior vice-president and chief economist Stephen Poloz. "Export gains will be achieved across most other sectors, but this will not diminish the impact of weakened energy prices on overall export growth next year, as the province's reliance on oil and gas remains significant." Falling energy prices and slower volume growth are expected to cause energy exports, which account for more than 70 per cent of Alberta's total exports, to decline 8 per cent in 2005 after rising by 6 per cent this year. Some oil and natural gas price weakening is expected as global political uncertainty continues to dissipate, global inventories rebound, and Iraqi production comes back on stream. Crude petroleum export earnings are anticipated to drop by 9 per cent in 2005 after surging 18 per cent this year. Natural gas sales will follow a similar trend as lower prices and export volumes trim back sales by 4.5 per cent this year and a further 8 per cent in 2005. The industrial goods sector is projected to build on the 19 per cent rise in sales this year with a more modest increase of 5 per cent in 2005. The positive gains this year are due to a favourable pricing environment for commodities coupled with an increase in industrial demand from the U.S. Improved U.S. growth prospects will similarly help lift machinery and equipment sales by 6 per cent this year and 5 per cent in 2005. The forestry sector showed across the board improvement this year with exports rebounding by 19 per cent as a result of increases in both price and volume. However, this growth will subside with exports growing a modest 1 per cent next year. Alberta can expect exports of raw and semi-finished goods to taper in 2005 as most commodity prices near their cyclical peak. In 2004, energy sales will be the largest export sector, accounting for an estimated 69 per cent or $42.7 billion of total exports. This is followed by industrial goods at almost 10 per cent or $6 billion and agri-foods at 8 per cent or $4.8 billion. Overall, merchandise exports in Alberta are expected to reach $61.7 billion in 2004, up 9 per cent over last year, and are expected to decline to $58.6 billion in 2005. Nationally, the economy is expected to grow by 3.2 per cent in 2005, roughly on par with 2004, and export sales should increase by 1 per cent in 2005, after rising by 9 per cent this year. A copy of EDC's Global Export Forecast is available on EDC's web site: http://www.edc.ca/docs/ereports/gef/EFindex_e.htm EDC provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets. Founded in 1944, EDC is a Crown corporation that operates on commercial principles. - 30 - Information: Glen Nichols Public Affairs Tel.: (613) 598-2876 E-mail: glnichols@edc.ca
