(CALGARY) November 1, 2007 The value of Alberta's exports should grow 7 per cent in 2007, but that rate will moderate to 4 per cent in 2008 according to a provincial export outlook by Export Development Canada (EDC).
"Oil and commodity prices have been a major driver in the growth Canada has experienced in recent years, and that has kept Alberta well ahead of national averages," said Stephen Poloz, Senior Vice-President of Corporate Affairs and Chief Economist. "We expect the broadening global slowdown to continue through much of 2008, and that will temper the hot demand we have seen for the province's exports. That means far more moderate growth rates for Alberta next year."
Although merchandise export growth will slow in 2008, EDC expects the overall pace will remain respectable due to steady increases in energy shipments (responsible for 70 per cent of the province's total exports). Respectable gains for forestry and machinery and equipment will also add to next year's export performance. Agri-food however, will be the stellar performer in growing exports, with a projected 15 per cent growth rate.
With a WTI crude oil price forecast of USD 66/barrel in 2007 and USD 64/barrel in 2008, crude and related exports will have solid price support through the forecast period. EDC predicts a 5 per cent increase in crude and related product exports in 2008, but pipeline capacity constraints may limit volume gains. Natural gas exports are expected to fall in 2007 and 2008 on lower production, greater diversion toward domestic consumption, and high exploration and development costs. EDC expects the market price of natural gas to average USD 7.5/mmbtu in 2008.
Oilseeds, pulse and wheat exports jumped significantly in 2007. EDC expects wheat will experience another large price-induced increase in 2008, with demand driven by biofuels, weather-related crop damage that has driven global stocks to lows not see seen since the 1970's, and stronger demand in emerging markets. This will work its way downstream into higher feed prices, significantly boosting costs for Alberta's CAD 2.5 billion live animal and meat processing export industries.
Alberta's fertilizer industry should continue to show strength as high grain prices continues to life global planting, but chemicals and plastics face the effects of slowing U.S. housing and consumer demand.
Machinery and equipment exports are expected to grow by 5 per cent in 2008 after an estimated gain of 16 per cent in 2007. Exports of mining, oil and gas and agricultural equipment should prove solid throughout 2008, but a softer outlook for telecommunications and other electronic equipment can be expected due to a slower pace of economic activity in the United States and other key markets.
Nationally, Canadian economic growth is forecast to remain stable at 2.3 per cent in 2007, and 2.6 per cent in 2008. Key price gains in commodities have put Canadian exports on track to increase by 3.7 per cent in 2007, but the impact of weaker U.S. and global demand will have the export growth rate more than halved to 1.5 per cent in 2008. Internationally, EDC is forecasting a 4.9 per cent global GDP growth rate in 2007, and 4.5 per cent in 2008. EDC's Global Export Forecast is available at http://www.edc.ca/gef.
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 6,400 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 has been recognize as one of Canada's Top 100 Employers for seven consecutive years.
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Media contact: Phil TaylorEDC Public Affairs(613) 598-2904ptaylor@edc.ca
