MONTREAL - May 25, 2006 - The value of Quebec's provincial exports are expected to grow by 4 per cent in 2006, matching the pace of 2005, but will remain flat in 2007, according to a provincial export outlook by Export Development Canada (EDC).
"Although most sectors will fare better this year, Quebec's ailing forestry and consumer goods industries will significantly drag down overall growth," said Stephen Poloz, Senior Vice-President of Corporate Affairs and Chief Economist. "Prospects for Quebec exports in 2007 are more downbeat owing to slower global demand, lower commodity prices, weaker business jet sales and unresolved difficulties in the furniture and garment industries."
Quebec's exports are more diversified than many provinces, with the industrial goods, forestry, manufacturing and equipment, and transportation sectors accounting for 30.3 per cent, 17.87 per cent, 15.3 and 14.2 per cent, respectively, of the province's goods and services shipped abroad.
On the heels of a 7.7 per cent rise in 2005, shipments of industrial goods will post another strong increase this year of 8 per cent. Robust metal prices and rising production capacity at Alcan's Alouette aluminum smelter (now the world's fifth largest) will support metal sales. Demand for chemicals and plastics will also remain solid in 2006. In 2007, however, as the world economy slows and commodity prices ease off, exports of industrial goods are expected to flatten to 0 per cent growth.
Quebec's forestry exports are expected to drop 5 per cent in 2006 and 6 per cent in 2007. A persistently strong Canadian dollar, surging electricity prices and falling US demand will continue to depress exports of newsprint, Quebec's main forestry product, causing a number of plant shutdowns and conversions to higher grade papers. Looking forward to 2007, a deterioration in the pricing environment and a further drop in US homebuilding are expected to grind timber export growth to a halt.
Despite a very healthy environment for capital investment last year, Quebec's exports of machinery and equipment (M&E) grew by nearly half of the national average (3.1 per cent per cent vs. 5.6 per cent). Poor export growth in mining, oil, telecom and agricultural machinery have been a drag on Quebec's M&E exports. In 2006, EDC expects this gap to narrow (4 per cent vs. 5 per cent nationally) owing to a rebound in provincial IT exports and continued growth in heavy-machinery sub-groups. Looking forward to 2007, the gap with the rest of Canada is expected to disappear, with Quebec's M&E exports forecast to grow by another 4 per cent.
The transportation sector is heavily reliant upon regional jet exports, which have slowed over the past few years. Growth in Quebec's transportation equipment exports are expected to cap at 5 per cent this year and 2 per cent in 2007. Aside from the RJ market, transportation exports are looking up. There is a revival in demand for railway products and other aerospace segments, such as aircraft parts, helicopters and avionics, which should remain strong through the forecast period.
Nationally, Canadian economic growth is forecast to remain stable at 3.0 per cent in 2006 and 2.7 per cent in 2007. Canadian export volumes are forecast to grow by 3 per cent in 2006, up slightly from 2 per cent in 2005. Internationally, EDC is forecasting 4.3 per cent global economic growth in 2006 and 4.1 per cent growth in 2007, down from 4.5 per cent in 2005. The continued healthy performance remains ahead of the historical long term average. EDC's Global Export Forecast is available at http://www.edc.ca/docs/ereports/gef/EFindex_e.htm.Export Development Canada (EDC) is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and is a recognized leader in financial reporting, economic analysis and human resource management.
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Media contact: Phil TaylorEDC Public Affairs(613) 598-2904 ptaylor@edc.ca
