Newfoundland exports gain from U.S. rebound, diversification: EDC forecast
ST-JOHN'S, Nov. 7, 2012 /CNW/ - Export Development Canada's (EDC) forecast for Newfoundland's export growth calls for a rebound of 6 per cent in 2013 after a 5 per cent decline this year.
"Newfoundland and Labrador exports faltered in 2012 on lower crude oil production, but as capacity comes back on line the energy sector will drive a large gain next year," said Peter Hall, Chief Economist, EDC. "Growth will be broadly-based in 2013, with metals, the fishery and the forestry sectors all contributing to the rebound in exports. With exports accounting for 37 per cent of Newfoundland GDP, the future is indeed bright if the province continues to diversify its sales markets at the same pace as in the last 5 years."
Since 2007, the province's share of exports to emerging markets has more than doubled from 7 per cent to 16 per cent in 2011. This rate of export diversification is among the best in Canada.
"Newfoundland's trend-defying increase in exporting companies, from 178 in 1999 to 195 in 2010, and superior trade diversification suggest robust export performance as the U.S. recovery pulls the world into the next growth cycle," said Hall.
Newfoundland's key international export sectors are energy, industrial goods and the fishery, which together account for nearly 98 per cent of the value of the province's total international sales.
The energy sector is dominant, making up two-thirds of provincial exports. EDC expects energy exports to grow by 8 per cent next year after a decline of 9 per cent in 2012. "Energy prices are weaker, but a U.S.-led global recovery will ensure that near-term volume demand is solid," said Hall.
Exports of metals and chemicals amount to 25 per cent of the province's total exports, and is forecast to grow by 1 per cent next year, following a 7 per cent gain in 2012. The outlook for 2013 is driven mainly by higher volumes, as metal prices have tracked downwards and are expected to soften further next year. Foreign sales of iron ore will continue to build as a result of ramped-up production at IOC and Labrador Iron Mines over the forecast horizon. Prospects beyond 2013 remain bright, thanks to significant investment by New Millennium Capital Corporation and Tata Steel.
The agri-food sector makes up 7 per cent of the province's total exports, and will see a partial 4 per cent recovery next year following a 9 per cent decline this year. Dominated by seafood, the agri-food sector is bearing the brunt of weak crab prices and lower quotas in 2012, but a recovery is expected in 2013.
The balance of the province's exports consist of a broad mix of goods, including forestry, M&E, aerospace and beverages, which are shipped by numerous small and medium-sized companies. Apart from forestry, these sectors have experienced significant export growth this year and an additional, modest acceleration is expected next year.
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