NL will have to wait until 2016 to see export recovery, says EDC
Machinery, auto parts and aerospace sectors will make up for major losses in energy.
ST. JOHN’S — Low commodity prices will cause Newfoundland and Labrador’s exports will drop by up to 14% this year before seeing double digit recovery in 2016, says Export Development Canada (EDC).
“The drop in oil prices has hit the Newfoundland and Labrador hard, as energy makes up the lion’s share of the provinces exports,” says Peter Hall Chief Economist, EDC. “Right now the energy sector is over-correcting after years of artificially-high prices. Today’s prices are an unfortunate consequence of global economic recovery, but we expect prices to bounce back $70 per barrel in 2016.”
EDC’s outlook predicts Newfoundland and Labrador’s energy export growth will jump by 21% in 2016.
The total export forecast for the province, across all sectors, is a decline of 14% in 2015 and a 19% rebound in 2016.
“This year’s good news for Newfoundland and Labrador will come from emerging markets,” said Hall. “A rapidly-rising emerging market middle class and recovery in the US will see agriculture exports soar by 17% this year.”
The machinery, auto parts and aerospace sectors are also expected to see big gains in 2015 with a growth forecast of 12%.
“The lower Canadian dollar is actually an asset in this case,” said Hall. “This is helping to entice foreign investment in a low-price year. As US industry starts to feel the effects of its capacity crunch, it’ll be scanning for new areas to invest.”