New Brunswick exports led by revival of forestry shipments to US: EDC forecast
MONCTON, NB, Nov. 6, 2012 /CNW/ - Export Development Canada's (EDC) forecast for New Brunswick export growth calls for a rebound of 6 per cent in 2013 after a 1 per cent decline this year.
"A surge in U.S. homebuilding will bring long-awaited revival to New Brunswick's forestry sector. Higher prices for natural gas and seafood products will further boost overall export growth," said Peter Hall, Chief Economist, EDC. "With 40 per cent of the province's GDP coming from exports, international sales are a pillar of the province's economy, and there are real opportunities brewing in the imminent U.S. recovery and fast-growing emerging markets."
The province's share of exports to emerging markets grew only marginally in the past 5 years, increasing from 5 per cent in 2007 to 7 per cent in 2011. At first glance, this rate of diversification is among the lowest in Canada. However, when you exclude the energy sector, exports to emerging markets grew from 17 per cent in 2007 to 22 per cent in 2011.
"Tough conditions in the U.S. market have led exporters to non-traditional export markets over the past decade. As this fast-growing share of trade increases, export growth potential will rise over time," said Hall.
New Brunswick's key international export sectors are energy, forestry and agri-food, which together account for nearly 90 per cent of the value of the province's total international sales.
The energy sector generates approximately 72 per cent of New Brunswick's total exports. EDC expects energy exports to grow by 7 per cent next year after a decline of 4 per cent this year. Despite weaker oil prices in 2013, energy exports will receive a boost from the partial recovery of natural gas prices from their 33% plunge in 2012. The reopening of the Point Lepreau nuclear power plant and stronger demand linked to growing U.S. economic activity will add to this outlook. New Brunswick's shale gas potential remains a key to future energy sector export growth.
New Brunswick's forestry sector accounts for more than 10 per cent of the province's total exports, and is forecast to grow by 12 per cent next year, following a 1 per cent gain in 2012. Wood products exports will receive a significant boost from the positive momentum in U.S. housing, with dwelling starts expected to rise nearly 40 per cent in 2013. At the same time, North American producers of containerboard and supercalendered paper are in the midst of pushing through higher prices. The expected improvement in the U.S. economy will support demand fundamentals for those products, which will shore up the province's paper sales.
At 9 per cent of exports, the agri-food sector is also an important exporter. Growth is expected to reach 6 per cent next year after a 12 per cent jump this year. With prices improving, sales of seafood products will rise further in 2013. Cranberry production remains relatively small but will continue to increase quickly with the opening of the Ocean Spray bog.
The closure of Brunswick Mine in 2013 will soften exports of industrial goods next year. However, the 12 per cent decline will be held in check by new projects or planned production expansions, led by PotashCorp Sussex mine, and to a lesser extent Halfmile, Mount Pleasant and Trevalli.
EDC's semi-annual Global Export Forecast addresses the latest global export conditions including perspectives on interest rates, exchange rates as well as export strategies to help Canadian companies minimize risk. It also analyzes a range of risks for which exporters should be prepared. The forecast is available on EDC's website 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 7,700 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