HALIFAX -- May 25, 2005 -- Nova Scotia's exports will grow only 2 per cent this year reflecting lower sales of energy sector products and lower seafood prices according to an Export Development Canada (EDC) forecast. On a brighter note, all other key industrial sectors are showing buoyant growth, averaging 6 per cent in 2005. Substantially weaker energy prices will pull down the province's 2006 exports by 1 per cent. "We expect to see a revival next year in agri-food exports, which is Nova Scotia's main export sector," says EDC Senior Vice-President and Chief Economist Stephen Poloz. "U.S. demand for seafood is still healthy, so combined with a weakening Canadian dollar and growth in other food sectors, we are looking at 4 per cent growth in agri-food exports in 2006." For now, the higher Canadian dollar remains a key risk for Nova Scotia, dragging down exports of fish, lobster, scallops, crab and other seafood. By 2006, modest weakening of the Canadian dollar should prompt small price increases for most of these products. Additional growth could come from blueberry exports, which in 2004 drove Nova Scotia's frozen food manufacturing exports above $100 million for the first time. The province's offshore natural gas industry is running into tough times, exacerbated by a 7 per cent reduction in gas production from Sable Island throughout 2004. Combined with a year-over-year drop in output, exports are expected to fall this year and next. On a positive note, refined petroleum product exports rose 80% in 2004, reaching $125 million (equal to 10% of energy exports from Nova Scotia). With stable refined production over the forecast period, however, the export value of these products will decline as crude prices fall from a forecast average of USD 45 per barrel in 2005 to USD 38 per barrel in 2006. In forestry, newsprint exports are expected to lead the pack as prices jump by a projected 14 per cent in 2005. Lumber exports, on the other hand, are forecast to fall towards year-end owing to dipping prices and softening lumber demand. "Tightening U.S. monetary policy is putting the squeeze on the U.S. housing market and will cut into Nova Scotia lumber exports," says Mr. Poloz. The outlook for pulp is more favourable with a small price gain expected in 2005 before a moderate price drop appears in 2006. All these factors culminate in a 6 per cent growth outlook for 2005, and stagnant performance for 2006. Exports of industrial goods will experience their best results in two years with 7 per cent growth forecast in 2005 (up from 4.5 per cent in 2004). Gypsum exports should remain strong throughout the year, as the pace of global construction supports higher prices, and initiation of drywall manufacturing in Cape Breton adds more value. Rubber and plastics will benefit from strong demand and higher prices. American vehicle sales, scaled back but still robust, should buttress Nova Scotia's $730 million in tire exports. Moreover, investment in the industry could also add to exports. Other export categories will be a mixed bag but overall will rise on improvements in computer equipment, aerospace and rail equipment. Nationally, the economy is expected to grow by 2.4 and 2.9 per cent in 2005 and 2006, based on good domestic economic fundamentals. In turn, Canada's export volumes should grow by 3 per cent in both 2005 and 2006. 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 is a Crown corporation that provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets worldwide. -30- Media Contact : Glen Nichols EDC-Public Affairs Telephone: (613) 598-2876 email: glnichols@edc.ca
