ST. JOHN'S, April 29, 2015 /CNW/ - Low commodity prices will cause Newfoundland and Labrador's exports will drop by up to 14 per cent this year before seeing double digit recovery in 2016, says Export Development Canada (EDC).
"The drop in oil prices has hit the Newfoundland and Labrador hard, as energy makes up the lion's share of the provinces exports," says Peter Hall Chief Economist, EDC. "Right now the energy sector is over-correcting after years of artificially-high prices. Today's prices are an unfortunate consequence of global economic recovery, but we expect prices to bounce back $70 per barrel in 2016."
EDC's outlook predicts Newfoundland and Labrador's energy export growth will jump by 21 per cent in 2016.
The total export forecast for the province, across all sectors, is a decline of 14 per cent in 2015 and A 19 per cent rebound in 2016.
"This year's good news for Newfoundland and Labrador will come from emerging markets," said Hall. "A rapidly-rising emerging market middle class and recovery in the U.S. will see agriculture exports soar by 17 per cent this year."
The machinery, auto parts and aerospace sectors are also expected to see big gains in 2015 with a growth forecast of 12 per cent.
"The lower Canadian dollar is actually an asset in this case," said Hall. "This is helping to entice foreign investment in a low-price year. As U.S. industry starts to feel the effects of its capacity crunch, it'll be scanning for new areas to invest."
EDC is Canada's leading provider of small business financing and insurance for companies with sales or business outside of Canada. EDC's economics team is considered to be among Canada's leading trade experts, who share their knowledge freely with Canadian companies to help them grow their international sales, and manage the associated market risks.
EDC's semi-annual Global Export Forecast addresses the latest global export conditions including perspectives on leading economic trends and export strategies to help Canadian companies maximize their export growth. The forecast 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
For further information: Spokesperson, Phil Taylor, Export Development Canada, (613) 598-2904, [email protected]