MONTREAL, November 18, 2004 -- Quebec export sales are forecast to increase by a modest 2 per cent in 2005, above the 1 per cent national average forecast, according to a provincial export outlook from Export Development Canada (EDC). This follows an expected 7 per cent hike in 2004, which is a complete reversal over the 6.9 per cent drop experienced in 2003. "The boom in demand for many Quebec products in 2004, especially industrial and forestry exports, will moderate next year in line with cooling world growth, but still remain above the national average," says EDC senior vice-president and chief economist, Stephen Poloz. While Quebec was spared from a generalized slump in transportation exports last year due to its specialization in regional jets (RJs), which have experienced almost a decade of sustained growth, the tables will turn over the forecast period. Quebec's transportation shipments are expected to fall by about 10 per cent this year and 7 per cent in 2005 as the RJ market - Quebec's aerospace niche - is starting to reach maturity. On a brighter note, sales of business jets are picking up while shipments of aircraft parts are also making solid export gains. Quebec's sales of industrial goods are expected to expand by 20 per cent in 2004, thanks to strong international demand for commodities that has boosted both export prices and volumes. Looking forward, commodity prices should fall back toward their long-term averages in 2005 as global growth slows to a more sustainable pace. Nonetheless, the doubling of the province's aluminum output should help Quebec's exports of industrial goods expand a further 4 per cent in 2005, outpacing the national average. After plunging 8.4 per cent in 2003, Quebec's forestry exports will bounce back by an estimated 11 per cent this year, led by surging lumber shipments. Improving fundamentals for newsprint, the province's main forestry product, and strong demand for pulp will also contribute to the increase. Next year, however, despite a continuing bullish outlook for newsprint and pulp, softening U.S. residential construction will moderate lumber demand and bring the growth of headline forestry exports to 6 per cent, still above the national average. On the upside, the 2003 downturn in machinery and equipment (M&E) is coming to an end. The recovery in corporate investment spending, a low interest rate environment and increasing corporate profitability will fuel demand for Quebec's M&E exports, which are seen growing about 6 per cent this year and 5 per cent in 2005. The pickup will be fairly broad based, with heavy machinery and information technology equipment leading the pack. Clothing and garments, a major sub-sector of Quebec's consumer goods industry, will be in for a rough time over the forecast period, posting small declines in 2004 and 2005. Factors dragging down exports in this industry are the phasing out of the Multi-Fiber Agreement, increasing competition from low-wage countries, and a relatively strong Canadian dollar. Strong demand for grains and a robust pricing environment will boost Quebec's exports of crop commodities, propelling forward provincial shipments of agri-food products by 9 per cent this year and 3 per cent the next. On the other hand, sales of live cattle, meat and meat preparations will continue to suffer from the May 2003 closing of the U.S. border to Canadian beef exports after the discovery of a single case of BSE. The U.S. market has since opened to boneless cuts of beef, supporting Quebec's shipments of processed beef products. 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 - Media Contact: Glen Nichols Public Affairs Tel.: (613) 598-2876 E-mail: glnichols@edc.ca
