(Moncton) - November 4, 2014
A strong performance from the forestry sector will help propel New Brunswick’s export shipments to a healthy 7 per cent growth rate next year, following a modest 3 per cent increase in 2014, predicts Export Development Canada (EDC) in the latest global forecast.
Forestry is expected to record the biggest improvement in both 2014 and 2015 among the province’s leading export sectors, with growth rates of 13 and 10 per cent respectively.
Peter Hall, EDC’s Chief Economist, said the building momentum in residential construction in the U.S., after several years of contraction and stagnation, will help lumber exports throughout Canada, including New Brunswick.
“Foresters in Canada have been waiting for U.S. housing starts to come to life for a long time and it finally looks like that day has come,” Hall said. “I don’t think this will be a short-lived phenomenon, either, because there’s been a lot under-building south of the border since the recession so there’s a lot of room to grow.”
As well New Brunswick producers stand to benefit from the 20 per cent increase in allowable timber cuts, which should really start showing dividends next year, said Hall.
Adding to the good news in the sector is the $513 million investment in mills upgrade over the next two years by J.D. Irving. That should pay dividends down the road. The only constraint, said Hall, is that the pulp and newsprint, continues to face the challenge of low demand.
While the province’s export story for this year and next is lumber, energy remains king in New Brunswick as far as exports are concerned and will continue in that role for some time. The sector accounts for about 70 per cent of total foreign sales and should the East-West pipeline, or the plan to convert the Canaport LNG terminal into an export facility, come to fruition, energy may become an even bigger player.
In the near term, energy exports are expected to show solid gains of 4 per cent this year and 6 per cent next year, helped by the return to full capacity of the Irving refinery in Saint John.
Also likely to get a boost next year is the province’s agri-food sector, which is expected to rebound from this year’s flat performance with a strong 9 per cent increase in foreign sales. Fish and seafood exports will particularly benefit from increased demand and from higher prices.
Longer term, the sector’s future is bright, if as expected the implementation of trade agreements with South Korea and Europe helps producers find new markets.
The only sour note in the province’s export picture comes in the metal mining sector. The impact of the Brunswick Mine closure, with the subsequent loss of 90 per cent of zinc production this year, will result in a 16 per cent retreat in foreign shipments for the sector in 2014. Growth should return in 2015, but it will be modest, said Hall.
EDC is Canada’s export credit agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public- sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment.
For more information about how EDC can help your company, visit www.edc.ca.
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Phil Taylor
Export Development Canada
613) 598-2904
ptaylor@edc.ca
