(ST. JOHN’S) – Wednesday, November 4, 2009 – Newfoundland and Labrador’s international exports will rise by a slight 2 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC).
Supporting the overall growth in 2010 will be global improvements in prices for crude oil, base metals and shellfish, and a slight firming of demand overall, but the gains will be hampered by declining energy output despite the addition of satellite fields.
“A recovery in most prices related to Newfoundland’s economy next year will give exports a lift, but gains will be moderated by further declines in oil production and still-lacklustre global demand,” said Peter Hall, Chief Economist, EDC. “While there is growth next year, it will be mostly flat and volume based.”
“Energy exports, which represent over three-quarters of total foreign sales for the province, are set to fall 49 per cent this year. The stunning decline is driven by a drop in average crude oil prices, from US$100/brl in 2008 to US$57/brl in 2009, and declining production at the Hibernia,” Mr. Hall added.
In 2010, weaker crude production is forecast to partly offset higher prices and a slightly weaker Canadian dollar, resulting in a 1 per cent drop in energy exports. On a more positive note, despite discouraging credit conditions, construction on the Hebron project is still scheduled to start in 2012.
Industrial goods are the second largest export sector for Newfoundland, accounting for 14.8 per cent of the province’s total.
“Exports of iron ore, the main component of industrial goods shipments, were stronger than expected in the first half of this year, but the outlook for the remainder of the year, and into 2010, is considerably more negative,” Mr. Hall said. EDC expects industrial goods exports to fall 36 per cent this year before rising 19 per cent in 2010.
The agrifood sector accounts for 6 per cent of the province’s exports. While still facing significant headwinds, the sector will not be hit quite as hard as others despite low prices for shrimp and crab, two of the province’s main cash species.
“What would have been a sharp export decline was moderated by the development of the salmon aquaculture sector, which is benefiting from the misfortunes of Chilean farmed salmon producers,” Mr. Hall said. EDC expects the gains in farmed salmon and recovering shellfish prices to encourage a 4 per cent rebound in the province’s overall agrifood sector in 2010.
Canadian exports are forecast to contract 23 per cent in 2009 before rebounding 6 per cent in 2010. Nationally, economic growth is expected to fall by 2.3 per cent in 2009 with an upturn to 1.9 per cent in 2010. Internationally, EDC is forecasting a decline of 1.3 per cent in 2009 and 2.9 per cent growth in 2010. 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 named one of Canada’s Top 100 Employers for nine consecutive years.
-30-
Media contacts:
Phil Taylor
Export Development Canada
Tel: (613) 598 2904
BlackBerry: ptaylor@edc.ca
