OTTAWA, May 27 /CNW Telbec/ - Prince Edward Island's international exports are forecast to grow by a modest 2 per cent in 2010 before rising 6 per cent in 2011, following expected trends in demand and prices, according to a provincial export forecast released today by Export Development Canada (EDC).
"Compared to all provinces, the island's exports were least affected by the global economic crisis, and the province's niche sectors, such as machinery and equipment, transportation and industrial goods sectors should continue to perform well," said Peter Hall, Chief Economist for EDC. "However, the fundamentals for the agrifood sector, dominated by potato and lobster, remain soft."
"Agrifood shipments, accounting for 58 per cent of the province's total foreign sales, are dominated by exports of processed potatoes and seafood, most of which go directly to the U.S. As such, the sector is highly vulnerable to price and demand fluctuations."
EDC expects PEI's agrifood sector to shrink 2 per cent this year before posting a modest 6 per cent gain in 2011.
"Prospects for McCain and Cavendish, the province's top processed food exporters, drive that segment's outlook," Mr. Hall said. "Most of the processed crop ends up in fast-food restaurants or in supermarket chains, so the sector should be fairly recession proof, but pricing appears weak."
"Idaho's large potato crop last year dampened demand for PEI-processed potatoes, leading to temporary plant shutdowns. As a result, export sales are expected to remain sluggish in the first half of 2010. As excess stocks are worked off, we expect prices and volumes to begin firming by 2011."
"Seafood sales remain pinched by the US recession, as lobster tends to be highly price-sensitive. With market demand dominated by the US Northeast, pricing continues to be soft. Since landings were up last year, there is further pressure on the "shore" price. EDC expects fish and seafood exports to slide 1 per cent in 2010, followed by an 8 per cent rebound in 2011."
Three other categories of exports, which account for a combined 32 per cent of the province's total foreign sales, are machinery and equipment (M&E), transportation equipment, and industrial goods. These dynamic sectors continue to provide some upside to the export outlook.
"While many M&E segments are suffering at the hands of the U.S. slowdown, sales of turbines are expected to once more drive sector export earnings," said Mr. Hall. "Niche manufacturers of food and beverage processing M&E, like Diversified Metal Engineering Ltd, should see solid sales. Countries as far afield as Brazil, China, South Africa, Turkey and others are growing their domestic food processing capabilities, and rely on highly customized equipment."
Canadian exports are forecast to rise 11 per cent in 2010 and 7.6 per cent in 2011. Nationally, economic growth is expected to rise 2.5 per cent in 2010 and 2.9 per cent in 2011. Internationally, EDC is forecasting global growth of 3.7 per cent in 2010 and 4.2 per cent in 2011. EDC's Global Export Forecast is available 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 8,400 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada's Top 100 Employers for nine consecutive years.
SOURCE Export Development Canada
For further information: For further information: Media contacts: Phil Taylor, Export Development Canada, Tel: (613) 598-2904, Blackberry: email@example.com