(OTTAWA) – May 21, 2009 – Prince Edward Island’s exports will drop by 5 per in 2009 before rebounding by 4 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC).
“Export growth, especially in the province’s key markets, namely the U.S., U.K., E.U. and Japan, will be non-existent this year, and we expect weakness in 2010 as well,” said Peter Hall, Chief Economist of EDC.
“Fortunately, PEI’s export structure, anchored by processed agrifood staples and supported by niche manufacturing, equipment and transportation sectors will help mitigate the largely negative outlook when compared with the national average.”
The agrifood sector accounts for 61 per cent of the province’s total export picture, and EDC expects exports to slip by 4 per cent this year before climbing a modest 2 per cent in 2010.
Agrifood shipments are dominated by sales of table and processed potatoes and seafood, with nearly 85 per cent of these destined for the U.S. Prospects for McCain and Cavendish, the province’s main exporters of processed foods, are relatively positive through 2010 owing to positive price and volume trends. This sub-category is largely recession-proof, as most of PEI’s processed potatoes are destined for fast-food restaurants or supermarkets. EDC expects a similar outcome for cash crops (table potatoes) and dehydrated potato granules.
In contrast, the seafood subsector (mostly lobster and cultivated mussels) will be stung by the U.S. recession in 2009. EDC expects fish and seafood exports to slide by 19 per cent in 2009 before a 4 per cent rebound takes hold in 2010 as key export markets slowly recover.
PEI’s principal destination market for this subsector is dominated by demand from the U.S. Northeast. Lobster is not a staple food item, making demand and price highly sensitive to the economic cycle.
Efforts to brand PEI lobster with a ‘sustainable catch’ certification are underway, which could open up PEI lobster to a larger market in the EU. However, this potential positive impact may not unfold until 2010 or 2011. Mussels, however, are less price-sensitive as a niche product.
Three other categories of exports, which account for a combined 27 per cent of the province’s total foreign sales, are manufacturing and equipment (M&E), transportation equipment and industrial goods. These dynamic sectors are expected to provide an upside to PEI’s overall negative export outlook.
Aerospace has been the key driver of the province’s transportation sector, a result of its growing capacity to perform major engine overhauls and aircraft modernizations. While Canadian sales of new aircraft will slump in 2009, companies like Atlantic Turbines International and Honeywell have a proven track record in aftermarket service, and may do well given their offering of a more cost-effective method of keeping aircraft in the air.
Rail-car overhauls are also an important contributor to the transportation sector’s rampant growth, and could do well in 2009 as a result of the impact of fiscal stimulus packages in the U.S. and E.U. on infrastructure spending.
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
