(ST. JOHN'S) - May19, 2009 - Newfoundland and Labrador's international exports will drop by half in 2009, resulting in the largest decline in the country according to a provincial export outlook by Export Development Canada (EDC). EDC expects exports to rebound a modest 7% in 2010.
"Newfoundland and Labrador will have a tough go in 2009 as massive commodity price declines and production cutbacks lead to high double digit drops for energy, industrial goods, and forestry exports," said Peter Hall, Chief Economist of EDC.
"In 2010, gains in prices for key commodities like crude oil and iron ore will lift the value of the province's exports, but volumes will likely weaken again as crude production continues to fall. Ongoing mega construction projects mean the long-term outlook is bright, but the export benefits of these projects lie largely beyond 2010."
The energy sector accounts for 76 per cent of the province's total export picture. In 2009, EDC expects a 57 per cent drop in the province's international energy exports, driven mainly by the projected fall in crude oil prices.
EDC's oil price forecast calls for an average of USD 47/brl in 2009, and EDC expects that this price drop will lead to a decline of 20 per cent in the province's export volumes of crude as lower production at the Hibernia, Terra Nova and White Rose platforms sets in. Production will continue to decline throughout 2010 but at a decelerated rate thanks to additions of White Rose satellite fields and Hibernia South.
Despite the financial market turmoil, however, construction on the Hebron project is still expected to start in 2012. Exports of refined products from the Come-by-Change refinery will follow EDC's forecast for crude oil and related product prices, expected to average USD 55/brl in 2010.
The agrifood sector accounts for 6 per cent of the province's total export picture. While commercial fishermen have seen the combined pressures of high oil prices and a high CAD disappear since last year, faltering demand in the wake of the global recession has now set in. This will drive agrifood exports down 4 per cent in 2009 before a modest price increase adds to the underlying strength in the emerging aquaculture sector.
Exports of farmed salmon and steelhead trout could see tremendous upside as a result of the province's significant coastline and ongoing investments. EDC does not anticipate any major quota adjustments for key species such as crab or shrimp through 2010, but there is some upside for landings of lesser valued ground fish.
Canadian exports are forecast to decline by 22 per cent in 2009 before rebounding by 7 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
