Effects of lower oil prices offset by growth elsewhere in province's highly diversified economy
VANCOUVER, Nov. 4, 2015 /CNW/ - Lower prices for energy, metals and minerals will produce subdued export growth for British Columbia this year, but stabilizing commodity prices and continued growth in the United States should see the province's exports increase by six per cent in 2016, according to a new global export forecast released by Export Development Canada (EDC).
The Global Export Forecast Fall 2015 says B.C.'s exports will grow by just one per cent in 2015, restrained by a 21 per cent drop in the value of energy exports and a five per cent decline in metals, ores and other industrial products. All other sectors will see increased exports this year, led by agri-food, which EDC expects will soar by 23 per cent as a result of increased demand from the United States.
"British Columbia is one of the most diversified provinces when it comes to exporting, so that has helped it to reduce the impact of a protracted and steep decline in oil prices this year" said Peter Hall, Chief Economist at EDC. "B.C. also stands to benefit next year as oil prices rise somewhat and demand increases for energy exports such as natural gas and electricity."
Weakness in global commodity prices will bring down the value of B.C.'s exports of metals, ores and other industrial products despite an increase in the volume of those exports. As prices improve in 2016, EDC is forecasting a five per cent increase for this sector.
Forestry, which has seen exceptionally strong growth since the start of the decade, accounts for more than a third of B.C.'s exports. EDC notes that, while the sector is still set to grow by five per cent in both 2015 and 2016, very tight supply conditions caused by the mountain pine beetle infestation and competition from cheaper Russian logs in China will lead to a gradual deceleration of this growth.
"China and other Asian countries are a very important market for B.C. exports, notably forest products," said Hall. "Demand from these countries, along with the continued strength of the U.S. economy, will contribute to solid export growth in all sectors in 2016."
Hall notes that the free trade agreement between Canada and South Korea has not had a significant impact on export figures for this year, but businesses should begin to see some positive effects in the second half of 2016.
EDC is Canada's leading provider of small business financing and insurance for companies with sales or business outside of Canada. Some of its services include the Export Guarantee Program to help exporters access more financing, Foreign Exchange Facility Guarantee to help exporters manage foreign exchange risk, and Political Risk Insurance that can cover up to 90 per cent of losses from political risks in foreign markets.
EDC's economics team includes some of Canada's leading trade experts, who share their knowledge freely with Canadian companies looking to grow their international sales and help them manage the associated market risks. Its semi-annual Global Economic Forecast addresses the latest global export conditions, including providing perspectives on leading economic trends and export strategies to help Canadian companies of all sizes maximize their export growth. The forecast also analyzes a range of risks for which exporters should be prepared.
Visit the Global Export Forecast: Fall 2015 page for the full report
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
For further information: Spokesperson: Simon Forsyth, Export Development Canada, (613) 598-3852, [email protected]