EDMONTON, May 20, 2015 /CNW/ - The dramatic drop in oil and gas prices will lead to a 17 per cent fall in Alberta's export earnings in 2015, but partial price recovery and volume gains will help overall exports rebound in 2016 to the tune of 19 per cent growth.
The forecast was made today by Export Development Canada (EDC), Canada's leading provider of small business financing and insurance for companies with sales or business outside of Canada.
"This will be a difficult year for Alberta exports, but there is light at the end of the tunnel," said Peter Hall, Chief Economist, EDC. "The continued revival of the global economy, driven by US growth, and the anticipated rise in oil prices back to the $70-per-barrel level will fuel the expected turn-around next year," added Hall.
The forecast predicts a 25 per cent drop in energy exports and a 23 per cent drop in natural gas exports this year, which is significant for an economy that depends on energy for nearly 75 per cent of its export revenue.
However, the energy sector is expected to bounce back with 27 per cent growth in 2016, while natural gas will stage a significant yet less dramatic comeback with 9% growth in 2016 due largely in part to increased shale gas capacity in the U.S.
Outside of energy, the export story is positive for Alberta. Exports from sectors like agriculture, machinery and equipment, and chemicals and plastics will collectively see 7 per cent growth in 2015, followed by 3 per cent growth in 2016.
"Energy receives all the headlines but it's great to see positive growth in other sectors," said Hall. "Diversification is an important insulator, one that can protect an economy against seismic shifts in any one sector of the economy, like we're seeing right now with energy."
"Alberta will always be about oil and gas, but it helps to develop strength in other sectors that can fill in when commodity prices are down."
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 sales. It also analyzes a range of risks for which exporters should be prepared.
EDC is Canada's trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public-sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment.
For more information about how EDC can help your company, visit www.edc.ca
SOURCE Export Development Canada