MONTREAL—Falling energy and metal prices will mask healthy Canadian export volumes next year, according to the chief economist with Export Development Canada (EDC).
The Canadian government’s lending agency for exporters has upgraded its outlook and forecasts the value of exports will rise 10 per cent this year, but only six per cent in 2015.
However, stripping out the impact of lower prices, the pace of volume growth is expected to increase one percentage point to five per cent next year and stay at that level for several years.
“This is a world that is actually revving up,” Peter Hall said in an interview.
EDC expects prices will bottom out in 2016 to 2017 and then modestly rise for oil and gas and base metals.
Hall said the higher level of exports is an “up-shift” from 2010 and would be the best stretch since before the 2008 recession.
A lower Canadian dollar and surging United States economy could even boost export growth beyond EDC’s forecast.
Results through September that saw double-digit growth in some key industries took the agency by surprise.
Energy exports grew faster than expected, metal production came onto the market from projects initiated when prices were high, the agricultural sector benefited from a 2013 bumper crop, and the forestry industry capitalized on U.S. demand for housing construction.
“If there’s any risk inside of our forecasts, it’s on the upside,” he said.
The positive export outlook is driven mainly by the surging U.S. economy, which is growing at a pace as fast or faster than all but one period in the last 20 years.
Exports to Western Europe are holding up despite economic weakness, and emerging Asian countries are expected to pick up the pace next year, said EDC’s fall Global Export Forecast.
It expects global economic growth will accelerate to four per cent in 2015, from 3.2 per cent this year, fuelled by a 3.6 per cent expansion in the U.S.
Energy is expected to be the top export performer this year, rising 19 per cent but falling to four per cent in 2015.
Forestry will be runner-up at 13 per cent this year and 10 per cent in 2015 propelled by higher U.S. housing construction.
A continuing ramp up in U.S. business investment is also expected to drive up exports of machinery and equipment, which are expected to increase to 16 per cent in 2015, from eight per cent this year.
Quebec is expected to defy the national trend by seeing growth accelerate in 2015 to nine per cent, from eight per cent this year.
The increase will be driven by stronger demand for lumber, aluminum and aerospace products.
The province’s aerospace sector is expected to post a third year of double-digit increases in 2015 with the first deliveries of Bombardier Inc.’s new CSeries commercial jet.