PEI's exports to rise by 5 per cent in 2011, says EDC

MONCTON, NB, Oct. 28 /CNW/ - Prince Edward Island's (PEI) international exports are forecast to grow by 5 per cent in 2011 following a 7 per cent contraction this year, according to a provincial forecast by Export Development Canada (EDC). This comes on the heels of a 1.8 per cent drop in 2009.

"This year's contraction in PEI's exports is broadly-based. Softer prices for potatoes and weak lobster sales held back the agri-food sector, and sharp declines hit the machinery and equipment and transportation sectors," said EDC Chief Economist Peter Hall. "Next year's growth will be driven by a turnaround in potato prices and lobster sales."

"Agri-food shipments, dominated by processed potatotes and seafood, account for about 60 per cent of provincal exports. Given that PEI's agrifood prospects are largely determined by U.S. demand, we expect to see a rebound in 2011 when price conditions in the U.S. start to improve."

EDC's forecast for PEI's agri-food exports is a contraction of 3 per cent this year, followed by a 4 per cent rebound in 2011.

"While production in Western Canada and the U.S. is expected to fall in 2010, PEI's volume outlook is stable, and we expect a reversal of fortunes for the processed potato market in the later half of 2010 as potato crops and inventories adjust," said Mr. Hall. "Prices are already responding, and were further supported by sub-zero temperatures in eastern Idaho in early September." 

"Seafood exports could see a turnaround as well, with a projected 8 per cent rebound in 2011," Mr. Hall added. "While lobster prices remain below year-ago levels, they have begun to strengthen, and landings are up significantly this year. In addition, interest in PEI mussels has picked up due to the contamination of coastal waters in the Gulf of Mexico related to the Deepwater Horizon oil spill." 

A third of the province's exports are derived from three sectors:  machinery and equipment (13.4 per cent), transportation equipment (10.8 per cent) and industrial goods (7.6 per cent).

"Industrial goods are really the only bright spot in the province's export picture this year," said Mr. Hall. "Chemicals and plastics, as an example, have shown impressive growth, while the recently announced capacity expansion plans of BioVectra will help to support pharmaceutical exports. Overall, this industry category should see exports rise 16% this year and a further 7 per cent in 2011."    

EDC's forecast for the machinery and equipment sector calls for a decline of 18 per cent this year with a rebound of 8 per cent in 2011. For the transportation equipment sector, EDC expects the province's exports to decline by 15 per cent this year with no growth in 2011.

Canadian exports are forecast to rise 11 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 4.33 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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Phil Taylor   
Export Development Canada
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