Alberta export growth steady through 2014 thanks to rising energy production, weaker dollar: EDC
EDMONTON, May 15, 2013 /CNW/ - Alberta's international exports are set for steady growth over the next two years, across all sectors, according to Export Development Canada's (EDC) Global Export Forecast.
EDC's Chief Economist, Peter Hall, was in Edmonton today to deliver his provincial export forecast to the Canadian Manufacturing and Exporters (CME) membership, where he predicted Alberta's exports will grow by 9 per cent in 2013 and a further 6 per cent in 2014.
"Alberta's export story over the next two years will be determined by both the capacity to ship crude oil and pricing of natural gas. Conditions will be helped by a dollar that's eased back from parity," said Mr. Hall.
The energy sector dominates Alberta's exports, accounting for approximately 73 per cent of the province's total international sales. Mr. Hall predicted that provincial exports of energy products will grow by 9 per cent in 2013 and 7 per cent in 2014, on the heels of only 2 per cent growth in 2012.
"While global crude prices have stabilized, Alberta's crude has been sharply discounted because of tight transportation capacity constraints," Mr. Hall explained. "Earlier this year, the price gap between WTI and Western Canadian Select crude averaged about USD 20/bbl, a wedge that adds up to about $16 billion in annual losses. Rail capacity increases and pipeline repurposing have together boosted shipments, and for the moment have narrowed the price gap. However, constraints remain a threat to the industry. Even so, crude exports to the U.S. should rise this year and next, the value of which is helped by an easing Canadian dollar."
"Lower U.S. inventories and rising prices will lift Alberta's natural gas export earnings at a double-digit pace this year and next," continued Mr. Hall. "Unfortunately, there's little incentive to increase Canadian production as long as Henry Hub prices remain below USD 5/mmbtu. For Alberta gas, this forecast is all about prices. Volumes will likely decline as natural gas rigs are redeployed to more profitable crude oil servicing."
The U.S. recovery is expected to help the machinery/equipment (M&E) and forestry sectors, with industrial activity in the U.S. spurring M&E sales, while a resurgent U.S. housing market will be a boon to lumber exports
EDC's forecast noted that other export categories will perform well this year, but 2014 will be more of a mixed outcome. Fertilizer prices are predicted to slip a notch, even though Alberta is expected ship more this year. Metals and minerals will be up considerably in 2013, but chemicals will grow at a slower rate.
Nationally, Canadian merchandise exports are forecast to rise 9 per cent in 2013 and 5 per cent in 2014, while economic growth (GDP) is expected to rise 2.2 per cent this year and 1.9 next year. EDC is forecasting global growth of 3.5 per cent in 2013 and 4.2 per cent in 2014.
EDC's semi-annual Global Export Forecast addresses the latest global export conditions including market- and sector-specific insights to help Canadian exporting companies grow their international business and minimize risk. It also analyzes a range of risks for which exporters should be prepared. Read EDC's Global Export Forecast.
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 7,400 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and a recognized leader in financial reporting and economic analysis.
SOURCE Export Development Canada