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TRANSBORDER TRENDS SPECIAL: EDC forecasts strong recovery for Manitoba exports

WINNIPEG, Man. -- Manitoba exports are forecast to rebound after two years of decline with exports expected to rise...


WINNIPEG, Man. — Manitoba exports are forecast to rebound after two years of decline with exports expected to rise by 13 per cent this year and a modest one per cent in 2005, according to a provincial export outlook from Export Development Canada (EDC).

That’s good news for the province’s transborder haulers who have suffered from freight volume declines in the past year.

"Manitoba’s export sector should see considerable improvement in 2004 as agri-food and resource-based commodities gather sales momentum," says EDC senior vice-president and chief economist Stephen Poloz. "Export growth will then level off in 2005."

The turnaround in growth is driven primarily by the agri-food sector where exports are set to surge by 20 per cent in 2004, but remain flat in 2005. Rising global demand, particularly from China, as well as new food processing capacity are behind the anticipated strong performance in this sector in 2004. Better harvest yields and relatively stable crop prices should also help accelerate grain and oilseed export earnings. However, live animal exports destined mostly for the U.S. will remain weak in 2004 as a result of the BSE blow in the beef and cattle industry.

The industrial goods sector is projected to climb by 15 per cent in 2004 before easing back to one per cent export growth next year. Metal export receipts, especially nickel and zinc, should experience significant growth as a result of increased global industrial production and higher prices. Chemicals, notably pharmaceuticals and medicine, will continue to build upon last year’s sizeable gains as Manitoba emerges as one of the main beneficiaries of U.S. drug imports.

A healthy expansion is also expected for Manitoba’s M&E and consumer goods industries following export contractions in 2003. Renewed business investment and rising profits in the U.S. will contribute to this improved performance. Manitoba’s focus on farming machinery and implements, which account for 20 per cent of all M&E exports, will bolster sales in this sector, as higher grain prices spur increased U.S. agricultural output.

Pressure from countervailing trade duties on Canadian softwood lumber should continue to be a factor in the forestry sector. However, strong pricing advances over the forecast period should lead to more robust growth with exports rising 15 per cent in 2004 and another six per cent in 2005.

In contrast, the outlook is less certain for the province’s energy sector. Crude oil exports will remain stable this year, but will contract somewhat in 2005 as prices ease back. Only electricity exports are expected to rise in 2004, relative to substantial declines in the last two years, due to a reversal of dry weather patterns.
Manitoba’s automotive and aerospace exports should begin to show slight improvements as confidence in the global recovery solidifies. The province’s heavy reliance on a recovery in the commercial segment of the aerospace industry will be a moderating factor. Motor vehicle exports, primarily the province’s important shipments of buses, were also hard hit in 2003 by a weakening in travel in the wake of terrorism, war and the SARS outbreak. But business restructuring and a trimming down of operations has the province’s bus manufacturers poised to take advantage of the market’s pent-up demand in 2004 and 2005.
Manitoba export sales dropped by more than six per cent to $8.8 billion in 2003. Export sales are expected to recover this year and grow by 13 per cent to $9.9 billion and by one per cent in 2005 to $10 billion.

Nationally, the economy is expected to grow by three per cent in 2004 and by 3.3 per cent in 2005. Export sales should increase by six per cent this year and by two per cent next year.

A copy of EDC’s semi-annual Global Export Forecast is available on EDC’s website
http://www.edc.ca/docs/ereports/gef/EFindex_e.htm


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