(TORONTO) – April 29, 2009 – Ontario's exports are expected to decline 12 per cent in 2009 and rise a modest 6 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC).
"The Ontario economy will continue to be held down by the U.S recession and the global credit crunch, which is acutely reflected in EDC's export forecast for the province through 2010," said Peter Hall, Chief Economist of EDC.
"The competitive advantage arising from the lower Canadian dollar will be drowned out by the effect of broadly weaker U.S. demand. Motor vehicles, machinery and construction products will be particularly hard hit as Ontario exports feel the full impact of tumbling U.S. business and consumer demand."
Highlighting Ontario's overall export weakness is the plight of its auto industry, with exports forecast to decline by 3 per cent in 2009 before rebounding slightly in 2010 by 12 per cent. Massive production cutbacks will severely hamper the province's overall export performance, given that the motor vehicle sector accounts for approximately 31 per cent of Ontario's international exports.
EDC expects the number of passenger vehicles exported to decline by 18 per cent in 2009, although the sharp decline in the CAD since 2008 will lessen the impact.
Physical volumes of auto parts are forecast to fall by 12 per cent in 2009, but cash received will actually rise by 2 per cent thanks in part to the exchange rate effect. In 2010, EDC expects that export values will experience a moderate rebound of 10 per cent, but not enough to generate a recovery.
The export outlook for industrial goods sector, which accounts for 33 per cent of Ontario's international export picture, is forecast to decrease by 25 per cent in 2009 and begin to recover in 2010 with growth of 9 per cent.
EDC expects demand for metals and ores to remain at extremely weak levels, with anticipated closures and production cutbacks in Sudbury's nickel basin. Ontario's relatively large gold mining industry mitigates the dismal story in base metal production, although there are several drill-ready projects that can go into operation once prices recover.
The chemicals industry, an important part of the industrial goods sector, is facing a grim 2009 given its longstanding reliance upon U.S. demand. The province's chemical exports are expected to plunge 16 per cent in 2009, as both prices and volumes fall.
The decline would be even more severe were it not for the pharmaceuticals industry, which is much less vulnerable to economic cycles. Pharmaceuticals represent more than one third of Ontario's chemicals exports, and with the new U.S. administration's focus on health care, exports from this market segment are expected to be stronger over the next two years.
Canadian exports are forecast to decline by 22.2 per cent in 2009 before rebounding by 7.4 per cent in 2010. Nationally, economic growth is expected to decline by 2 per cent in 2009 with a slight increase of 1.7 per cent in 2010. Internationally, EDC is forecasting a 1.3 per cent decline in 2009 and 2.3 per cent increase in 2010 in global GDP. 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 more than 8,300 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada's Top 100 Employers for eight consecutive years.
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Media contact:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
