Lower energy, metal prices mask 2015 export growth
Volume expected to grow 5% and stay at that level for several years.
The Canadian government’s lending agency for exporters has upgraded its outlook and forecasts the value of exports will rise 10% this year, but only 6% in 2015.
However, stripping out the impact of lower prices, the pace of volume growth is expected to increase one percentage point to 5% next year and stay at that level for several years.
“This is a world that is actually revving up,” Peter Hall said in an interview.
EDC expects prices will bottom out in 2016 to 2017 and then modestly rise for oil and gas and base metals.
Hall said the higher level of exports is an “up shift” from 2010 and would be the best stretch since before the 2008 recession.
A lower Canadian dollar and surging US economy could even boost export growth beyond EDC’s forecast.
Results through September that saw double-digit growth in some key industries took the agency by surprise. Energy exports grew faster than expected, metal production came onto the market from projects initiated when prices were high, the agricultural sector benefited from a 2013 bumper grain and the forestry industry capitalized on demand to US housing construction.
“If there’s any risk inside of our forecasts, it’s on the upside,” he said.
The positive export outlook is driven mainly by the surging US economy, which is growing at a pace as fast or faster than all but one period in the last 20 years.
Exports to Western Europe are holding up despite economic weakness and emerging Asian countries are expected to pick up the pace next year, said EDC’s fall Global Export Forecast.
It expects global economic growth will accelerate to four per cent in 2015, from 3.2% this year, fuelled by a 3.6% expansion in the US.
Energy is expected to be the top export performer this year, rising 19% but falling to four per cent in 2015. Forestry will be runner up at 13% this year and 10% next propelled by higher US housing construction.
A continuing ramp up in US business investment is also expected to drive up exports of machinery and equipment, which are expected to increase to 16% in 2015, from 8% this year.
Quebec is expected to defy the national trend by seeing growth accelerate in 2015 to 9%, from 8% this year.
The increase will be driven by stronger demand for lumber, aluminum and aerospace products.
The province’s aerospace sector is expected to post a third year of double-digit increases in 2015 with the first deliveries of Bombardier’s new CSeries commercial jet.
© 2014 The Canadian Press