(VANCOUVER) – Wednesday, May 19, 2010 – British Columbia's exports will grow at a double-digit pace in both 2010 and 2011 as commodity prices rebound and demand from the U.S. recovers, according to a Provincial Export Forecast released today by Export Development Canada (EDC).
"Brighter prospects for British Columbia's forestry sector are around the corner thanks the reopening of idled pulp mills and the long-awaited revival of U.S. residential construction activity. This will help to lift overall exports by 14% in 2010 and 13% in 2011," said Peter Hall, Chief Economist, EDC, during speeches in Surrey and Vancouver today.
Exports will also benefit from the opening of new gas plays, as well as developments in coal and metal mining, and the continued rapid economic expansion of Emerging Asia, especially China."
The forestry sector accounts for 30 per cent of B.C.'s exports, and EDC expects the sector to see 14 per cent growth in 2010, the first growth in 5 years. EDC expects an additional 13 per cent growth in 2011.
"US housing markets are forecast to be back in balance later this year. At that point, US housing starts will begin a rapid climb out of the huge abyss they have been in for over three years. The recovery should provide a significant boost to exporters of wood products," said Mr. Hall.
"At the same time, exports to China will continue to expand rapidly, thanks to building code amendments that now allow for the use of wood frames in that country. But with the industry still operating well-below capacity, there is limited scope for a rise in lumber and panel prices. Next year should see even stronger export growth, as U.S. housing starts rise to over 1 million units."
EDC expects Chinese pulp imports will again be an important sector growth driver in 2010 and 2011, although at a reduced pace compared to 2009 owing to increased competition from new capacity in Southeast Asia. North American and European pulp demand is expected to increase at the same time as a rebound in paper consumption from its historical low cycle. The province's paper exports, by contrast, will drop sharply in 2010, as the closure of the Kitimat paper and paperboard mill early in the year will significantly curtail capacity.
The energy sector accounts for 27 per cent of B.C.'s exports, and is forecast to rise by 20 per cent in 2010 and 17 per cent in 2011. "British Columbia's energy exports will expand rapidly this year and next, driven mainly by higher natural gas prices and increased coal production," said Mr. Hall. "In addition to our forecasted 40% increase in natural gas prices this year, exports will benefit from higher gas production out of the Horn River Basin shale gas formation."
"While the construction of a pipeline from the Montney shale gas formation as well as an LNG liquefaction terminal in Kitimat will further expand the province's export capacity and open new markets, these projects are still a few years away."
EDC expects B.C.'s coal exports to rise on increased production at various mines across the province, responding to better fundamentals. The opening of the Hermann mine and the re-opening of the Willow Creek mine next year are also expected to provide a further gain to production. Ongoing infrastructure spending in major Asian markets will continue to spur strong demand for hard coking coal, used in the production of steel. While EDC expects the 2010-11 contract prices to rise, the forecast notes that they will remain below the 2008-09 highs.
Canadian exports are forecast to rise 11 per cent in 2010 and 7.6 per cent in 2011. Nationally, economic growth is expected to rise 2.5 per cent in 2010 and 2.9 per cent in 2011. Internationally, EDC is forecasting global growth of 3.7 per cent in 2010 and 4.2 per cent in 2011. 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 8,400 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 nine consecutive years.
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Media contacts:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
