Quebec's exports below national average this year and next, says EDC

MONTREAL, Nov. 18 /CNW/ - Quebec's international exports are forecast to grow by 4 per cent in both 2010 and 2011, according to a provincial forecast by Export Development Canada (EDC). In comparison, Quebec's exports declined by 19 per cent 2009.

"Quebec's export recovery will be moderate this year, as pockets of robust growth are largely offset by strong declines in the machinery and equipment and aerospace industries," said Peter. Hall, Chief Economist, EDC. "Weaker global growth will result in modest gains across all industries in 2011, keeping overall performance below average for the second straight year."

"Quebec exporters won't get much relief from the Canadian dollar, which is forecast to remain stubbornly high through 2011."

The industrial goods sector forecast to grow by 19 per cent in 2010 and 5 per cent in 2011. This group of industries generates the largest share of Quebec's international export sales, at 34 per cent.

"Last year, Quebec's aluminum industry was pummeled by the global recession," Mr. Hall said. "Prices have recovered substantially since then, and production gains further augmented sales. Future growth prospects are bright as the automotive industry shifts to lighter, aluminum-based vehicle parts."

"Steel production will also likely rebound strongly this year in response to very strong demand from the U.S., Europe and China. Sustained activity in automotive production combined with a turnaround in the construction industry later next year will drive the sector to double-digit gains through 2011."

EDC's forecast reports that record-high prices for gold have been driving exploration and development activity in the province and significant new capacity is expected to come online this year, which will more than offset declining production at aging deposits.

Machinery and equipment, the province's second largest export sector, accounts for 15 per cent of Quebec's exports.

"Machinery and equipment exports have been considerably weaker than expected," said Mr. Hall. "The partial rebound in U.S. investment hasn't translated into higher sales in Quebec, and investor reticence dampens prospects for 2011. Public spending cutbacks in Europe will weigh on machinery and equipment exports, which, after suffering a 22 per cent drop in 2009, will shrink by a further 8 per cent this year before climbing by a modest 7 per cent rebound in 2011."

Forestry sector exports are forecast to grow by 14 per cent in 2010 and 5 per cent in 2011.

"The outlook for the forestry sector has deteriorated since the spring, given the mid-year setback in the U.S. housing sector," said Mr. Hall. "The outlook for the paper and pulp industries remains largely unchanged, with world demand conditions weighing on the sector through 2011."

The transportation sector, largely comprised of aerospace products, accounts for just over 14 per cent of the province's export total. EDC expects the industry's export earnings to fall by 17 per cent this year and post no growth in 2011.

"The time lag between orders and deliveries in the aerospace industry, usually 12 to 18 months, will result in falling export sales in both years of our forecast, before growth returns in 2012," Mr. Hall said.

"Rising costs and weak demand are key challenges to the struggling regional airline industry. But conditions will improve, and demand for new planes will rise as passenger traffic regains momentum in the coming years, especially in emerging markets."

EDC's forecast reports that the commercial jet segment stands to see the most growth over the medium term, in response to revived demand and the need to replace aging fleets.

Canadian exports are forecast to rise 12 per cent in 2010 and 6 per cent in 2011. Nationally, economic growth is expected to rise 3 per cent in 2010 and 2.2 per cent in 2011. Internationally, EDC is forecasting global growth of 4.3 per cent in 2010 and 3.9 per cent in 2011. EDC's Global Export Forecast is available at http://www.edc.ca/gef.

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.

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.

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Export Development Canada
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