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Weakened Canadian dollar may provide relief to Quebec exports in 2009: EDC report

MONTREAL, Que. -- Quebec’s international exports are expected to rise a modest 1% in 2009 after declining 4% ...

MONTREAL, Que. — Quebec’s international exports are expected to rise a modest 1% in 2009 after declining 4% in 2008, according to a provincial export outlook by Export Development Canada (EDC).


“The slight rise in Quebec’s exports in 2009 is possible thanks to an expected 10% depreciation of the Canadian dollar. Remove the exchange rate impact, and the province’s export outlook is considerably weaker,” said Peter Hall, vice-president and chief economist at EDC.


The industrial goods sector accounts for approximately 37% of Quebec’s international exports. The outlook for this sector is defined by volatile, and generally negative, commodity price movements and highly cyclical chemicals exports. Global demand for Quebec’s aluminum exports, a key input in automotive, commercial construction and aerospace applications, is expected to ease. The province’s iron ore exports, by contrast, could see another year of growth after a massive, price driven, export surge in 2008.


The forestry sector, which accounts for 14.6% of Quebec’s international export picture, is forecast to increase by 6% in 2009 after a 14 % decline in 2008. Lumber export volumes are unlikely to gain much of the ground lost since 2005, as existing home inventories in the US remain near all-time highs.


In the aerospace sector, weak demand out of the US, the destination for nearly half of total Canadian aerospace exports, will adversely impact the bottom line going forward. However, a sizable order backlog will help ease the impact of moderating demand through 2009, according to the EDC. Emerging markets, particularly commodity producing countries that are benefiting from current record market prices, may also help alleviate dwindling US demand, says the report.


Canadian exports are forecast to grow by 2% in 2008 before declining 1% in 2009. Nationally, economic growth is expected to grow by 0.9% in 2008 with a slight upturn to 1.4% in 2009. Internationally, EDC is forecasting a 3.8% growth rate in 2008 and 3.3% cent 2009.

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