(FREDERICTON) – May 22, 2009 – New Brunswick’s international exports are forecast to tumble by 27 per cent in 2009 before rebounding strongly by 23 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC).
“With energy accounting for two-thirds of total exports, the plunge in energy prices and delays in the beginning of operations at the LNG terminal in Saint John weigh heavily on the bottom line this year,” said Peter Hall, Chief Economist of EDC.
“Sales to the U.S. will continue to wane across the board, but future capacity expansions in the province bode well for the longer term outlook, including a potash mine in Sussex, and a second oil refinery in Saint John.”
The energy sector accounts for 68 per cent of the province’s total export picture. EDC expects the province’s energy exports will fall 31 per cent in 2009, as crude prices collapse from an average USD 100/brl in 2008 to a forecast USD 47/brl in 2009.
The start-up of operations at the LNG terminal in Saint John by mid-year will soften some of the energy sector’s challenges brought on by the plunge in prices. The resulting gain in natural gas exports is expected to provide a boost to volumes in the second half of 2009 and into 2010.
The refurbishment of the Point Lepreau nuclear power plant will be completed too late in the year to boost falling electricity exports in 2009, but could lead to an increase in 2010.
Overall, energy exports will rise 34 per cent in 2010, mostly from the first full-year of production at the LNG terminal.
The forestry sector in New Brunswick accounts for 11 per cent of the province’s total exports, and EDC expects declines of 10 and 2 per cent in 2009 and 2010, respectively.
While numerous sawmills have already exited the market, continued shutdowns are on the horizon in New Brunswick. The ailing US housing sector will see lumber and wood products exports decline by 14 per cent this year after a 35 per cent drop in 2008.
In the pulp segment, capacity expansions were undertaken in Atholville (AV Cell) and Nackawic (AV Nackawic) between the summer of 2008 and winter of 2009 to allow the mills to produce dissolving pulp used in the garment industry. However, weak demand from India and Indonesia, the primary export destinations for this specialty pulp, is forcing production cutbacks. EDC expects pulp exports will drop by 17 per cent in 2009 and post a more moderate decline of 2 per cent in 2010.
Paper exports are also expected to decline in 2009 due to weak demand in the US, as more newspapers feel the brunt of the recession. Newsprint and paper exports are expected to fall by 1 per cent in 2009, despite the weaker Canadian dollar. In 2010, exports will fall by a more aggressive 7 per cent as the market continues to adjust to the shift toward online-based publications.
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.
Media contact:
Phil Taylor
Export Development Canada
Tel.: (613) 598-2904
Blackberry: ptaylor@edc.ca
