Newfoundland and Labrador will see Canada’s most dramatic turnaround in export performance from this year to next, according to Export Development Canada’s (EDC) semi-annual Global Export Forecast. Challenges in the energy sector, particularly weak commodity prices, are the primary force driving the province’s exports down 11 per cent in 2016. However, Newfoundland exports are expected to rebound strongly with 18 per cent growth in 2017.
“It’s been a difficult 2016 for Newfoundland exporters, but export growth will come roaring back in 2017,” says Peter Hall, EDC’s Chief Economist.
As expected the ailing energy sector, which accounts for roughly two-thirds of Newfoundland and Labrador’s exports, is exacting a heavy toll on the province. Weak oil prices, coupled with falling production, will lead to an 18 per cent drop in energy exports this year. However, the province’s long-term outlook is promising, as the exploration and development efforts initiated a few years ago will soon come to fruition. In particular the Hebron oil field, one of the largest capital investments in the province, is on track to pump its first oil by the end of 2017.
“Investments are still happening on the oil side. In particular, there are commitments from investors to continue with the Hebron project, with production coming online in 2018,” says Hall.
The province’s exports of metals, ores, and other industrial products will see two per cent growth in 2016, a mild rise from a double-digit decline in 2015. Like the energy sector, this outlook is impacted largely by falling prices, particularly for iron ore. Considerable growth is forecast next year as a result of investments to increase capacity and boost production. EDC expects exports in the metals, ores and other industrial products sector to grow by 16 per cent in 2017.
The seafood sector, Newfoundland’s third-largest by export shipments, will grow by four per cent this year. Strong prices for shrimp and crab and a weak Canadian dollar are together driving growth. However, falling volumes are eating away some of these gains.
“While the overall export picture for Newfoundland and Labrador is choppy this year and next, we’re also seeing promise in innovative niche sectors, such as navigational and manufacturing technologies,” says Hall. “This diversification is encouraging.”
Mr. Hall is discussing both the provincial and national export prospects with local business people today at the Delta St. John’s Hotel. The event is being held in partnership with the Newfoundland Environmental Industry Association (NEIA).
“While these are challenging times for Newfoundland and Labrador exporters, especially those in energy and commodities sectors, better days are ahead,” says Hall.
“We think that now is the time to plan for and capitalize on global opportunities. Growth is coming, it’s just a matter of being well-positioned when it arrives.”
Over the past month, Hall has been travelling across Canada for EDC’s Let’s Talk Exports tour, which offers insights on the current global economy and explores how economic trends will impact Canadian companies and exporters.
Visit EDC’s Global Export Forecast: Spring 2016 to learn more.
