OTTAWA, Ont. — Export Development Canada (EDC) is predicting more turbulent times ahead for Canadian exporters.
The agency says Canada’s total exports will increase 4.2% over the remainder of this year, mainly due to soaring energy prices. However, its Global Export Forecast also predicts a 1% decline the following year.
“Since our Spring Global Export Forecast, there hasn’t been much good news for Canadian exporters. Losses due to the US sub-prime crisis and its spill over effects into Canada continue to mount, the impact of soaring commodity prices upon consumers continues to increase, and proof of slowing global production is rampant,” said Peter Hall, vice-president and chief economist for EDC. “The gain of 4% in exports in 2008 is actually an energy price story, but when all price effects are removed, Canadian exports are actually on track to tumble by 4% this year.”
EDC said the loonie will continue to be near parity with the US greenback through the summer, but will pull back by year-end and remain between 94 and 97 cents through the first half of 09. The forecast also suggests crude prices will sink below US$100 per barrel by the end of the year and will average US$84 per barrel next year.
“While EDC recognizes that global supply and demand for crude is tight, we sees signs that a large price correction is on the horizon,” Hall said. “On the demand front, growth expectations are likely to moderate as the global slowdown spreads and oil price subsidies in emerging markets are scaled back. On the supply front, the Energy Information Administration is already forecasting a doubling of OPEC surplus capacity, to four million barrels per day in 2009, and non-OPEC supply gains of one million barrels per day.”
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