Protectionism has become a tangible threat for certain key industries in Canada. One might expect a gloomy export forecast given what we’re seeing in the news. Instead, Export Development Canada’s (EDC) latest semi-annual Global Export Forecast (GEF) is revising its projection for 2018 upwards – to six per cent growth over last year – up two per cent from last fall’s forecast.
EDC says there’s room for even more growth, if Canadian businesses seize the opportunities that come with a growing global economy.
“Current growth is no mere flash in the pan, but a call to action for Canadian companies,” says Peter Hall, Chief Economist and Vice President at EDC. “Strong global performance will lead to more investment as businesses work to meet increasing demand across a number of sectors, and that will lead to increased opportunity for Canadian exporters.”
As has historically been the case, most of Canada’s export of goods (88 per cent) will be shipped to developed markets. However, sales are diversifying as more businesses find a foothold outside North America, and growth of exports to emerging markets will increase by seven per cent this year, outpacing growth of sales to developed markets which will reach five per cent.
Last year, Canada’s export gains were predominantly fuelled by higher prices in the energy, ores and metals sectors. In 2018, both commodities and manufactured goods will make strong contributions to the bottom line.
Sector-by-sector
Within manufacturing, the embattled aerospace industry is expected to see the most impressive gains. Exports are forecast to reach nearly CAD 19 billion in 2018, a 16 per cent improvement compared to last year. This is pushed, in large part, by success in securing new aerospace deals.
Also, in the protectionist crosshairs, ores and metals, which include steel and aluminum, continue to be a major factor in the overall picture. Growth will hit double digits once again this year, driven by higher commodity prices and new mining operations coming online.
Despite the softwood lumber disagreement, forestry is another sector experiencing major growth for now. The sector is up 16 per cent compared to 2017 – pushed, in large part, by rebounding U.S. housing starts. This uptick is temporary as that number is expected to drop considerably in 2019 when supply constraints begin to kick in.
Provincial outlook
Export growth in Newfoundland is expected to reach double digits in 2018 pushed, in large part, by oil production on the Hebron platform, and the ramping up of Vale’s nickel processing facility.
Quebec will see growth of eight per cent in 2018, thanks to a boost in the aerospace and mining sectors.
EDC is revising its previous forecast for growth in Alberta, projecting higher increases of seven per cent in 2018 and five per cent in 2019. Two major oil sands projects are set to enter their production phases, which will lift the volume of production in the province.
