Quebec exports set to grow by 9 per cent in 2010, says EDC forecast

MONTREAL, June 1 /CNW Telbec/ - Quebec's exports are forecast to increase by 9 per cent this year, followed by more modest growth of 5 per cent next year, according to the Provincial Export Forecast released today by Export Development Canada (EDC). Quebec's exports have declined in 5 of the past 10 years.

"While Quebec exporters will benefit from a recovery in demand for its natual resources, industrial goods and machinery and equipment, the lagged nature of aerospace orders will result in the transportation sector acting as a drag on export growth both this year and next," said Peter Hall, Chief Economist, EDC.

The industrial goods sector accounts for 34 per cent of the province's exports, and is forecast to grow by 16 and 3 per cent in 2010 and 2011, respectively. The outlook for exports of ores and metals, the principal segment of the industrial goods sector, will largely be driven by strong demand from China over the next two years. Shipments of iron ore to European markets was very strong last year, and stimulus-related impact is expected to peak by mid-2010. Following the peak, EDC expects a return of private sector demand in the U.S. that should compensate for the winding down of government stimulus spending.

The export outlook for Quebec's aluminum sector will improve in both volume and pricing terms. EDC predicts that prices will average USD 2,100/tonne this year and next, up strongly from depressed 2009 levels. The longer-term trend in the auto industry toward hybrid and fuel-efficient technology is expected to see a shift away from steel in favor of aluminum components, and provide additional growth potential for the industry. Despite these new developments, the 'new normal' will still leave capacity utilization rates well-below pre-recession levels.

In the aerospace sector, EDC expects exports of aircraft and parts to fall by 9 per cent this year and a further 2 per cent in 2011. Order deferrals and cancellations will dampen deliveries in 2010 and 2011, as the lagged nature of this export sector drags out the recessionary impact. Emerging markets are once again seen as an area of growth potential, with shipments to non-traditional trading partners expected to post healthy gains over the forecast horizon despite a contraction of overall sector exports.

The forestry sector accounts for 13 per cent of Quebec's exports, and EDC predicts that forestry product exports will increase 18 per cent this year and a further 5 per cent in 2011, with a significant price effect in both years. EDC cautions that the rebound in forestry exports this year is only relative to the extremely depressed levels of last year.

The recovery of U.S. residential construction activity, as housing starts begin to increase to meet the demands of a growing population and replacement of existing stock, will drive demand for lumber and wood products.

The demand outlook for paper products includes a recovery this year followed by a return to trend in 2011. Widespread shutdowns that characterized the industry last year should be reduced and capacity utilization will improve throughout 2010.

"This year, the pulp industry will be influenced by strong demand from China and the rebound from the recent recession-induced trough," said Mr. Hall. "Kruger's new mill in Trois-Rivières should more than offset reductions at Fraser Paper's mill in Thurso, but exports from Quebec will slightly lag the national average this year."

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.

For further information: Media contacts: Phil Taylor, Export Development Canada, Tel: [phone], BlackBerry: [email protected]