VANCOUVER – May 7, 2008 – British Columbia's exports will contract for the third consecutive year in 2008 with a 3 per cent decline projected for this year, according to a Provincial Export Forecast released today by Export Development Canada (EDC). Growth will return in 2009, but following back-to-back declines, the rebound will be modest at 2.6 per cent.
"British Columbia is the province that has been hardest hit by the housing-centred slowdown in the U.S.," said Peter Hall, Vice-President of Economics and Deputy Chief Economist. "Once again, the challenges of the forestry sector and weaker copper and natural gas output will be the major reasons for this year's decline. Energy exports will partially offset this decline thanks to the recent surge in coal prices, expected to be sustained throughout the year."
The forestry sector, which represents 39 per cent of the province's exports, has been badly hurt by the difficulties facing the U.S. housing sector. Exports of wood products will again decline in 2008, following an 18 per cent tumble in 2007. In the paper industry, the province has not avoided the current wave of consolidation and capacity closures, leading to weaker export volumes in 2008. This will be partly offset by higher prices. The forestry sector will continue to face challenges from energy prices, labour shortages, the Canadian dollar, fibre availability, and the mountain pine beetle infestation. Overall, the province's forestry sector exports will decline 5 per cent in 2008 before rising 14 per cent next year, as higher prices, a weaker Canadian dollar and the beginnings of a housing recovery boost export sales.
The energy sector accounts for 19 per cent of the province's exports and is expected to surge 17 per cent in 2008, largely as a result of higher coal prices. British Columbia's coal exports represent almost 80 per cent of the national total, and will benefit from stronger demand coming out of Asia, where coal is the fuel of choice for electricity generation. Concerns over potential global shortages have resulted in high prices. However, coal exports will be partly offset by weaker natural gas exports, which will decline for a third consecutive year in 2008. Declining output at the province's three major fields is the main reason for the decline in exports, which will be somewhat mitigated by higher prices and the falling Canadian dollar. In 2009, we expect coal prices to correct, leading to a 6 per cent decline in energy exports.
Despite strong global demand for industrial metals, the province's exports of industrial goods declined 5 per cent in 2007, as output fell at a major mining site. Copper prices rose again in 2007, partly offsetting the lower export volumes, but are expected to correct in 2008 as the US and global economies slow down. This, combined with weaker output, will result in an 18 per cent drop in exports in 2008, although prices will remain above historical levels.
Canadian exports are forecast to decline by 2 per cent in 2008 before posting 2 per cent growth in 2009. Nationally, economic growth is forecast to decline to 1 per cent in 2008 with a slight upturn to 2.3 per cent in 2009. Internationally, EDC is forecasting a 3.8 per cent growth rate in 2008 and 2009. 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 nearly 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, is a recognized leader in financial reporting and economic analysis, and has been named one of Canada's Top 100 Employers for seven consecutive years.
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B-roll of Peter Hall's thoughts on B.C.'s exports and the forecast for the forestry sector are available at the FTP site provided below. Additional b-roll for forecasts of the Canadian dollar, the Canadian economy, price of oil and other related topics are also available.
FTP site: ftp://relay1.edc.ca
User name: edcnews
Password: gef2008
The preview folder is for quick viewing. Please use the download folder for higher grade files suitable for television and radio broadcast use.
Media contact:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
