According to the latest Export Development Canada (EDC) global export forecast, Newfoundland and Labrador will be among the nation’s leaders in growth this year and into 2018.
The report forecasts 17 per cent growth in the province’s export market for 2017, second only to Alberta, which will see a 20 per cent jump this year.
However, come 2018, the report suggests Newfoundland and Labrador will see a nation-leading 12 per cent. This comes on the heels of an eight per cent decline in 2016.
The bulk of that growth is directly related to a rebound in the oil and gas sectors, led by Hebron coming online and producing first oil, anticipated before year’s end. (Nationally, the energy export sector is forecasted to grow 31 per cent this year.)
“When you mention oil and gas in any conversation, people sigh and they’re thinking about the price plunge that began in mid 2014 and lasted through the early part of 2016 and the fiscal fallout, the business fallout,” says EDC vice-president and chief economist Peter Hall.
“But the truth of the matter is when you plunge to a level that was as low as prices got to at the beginning of 2016 and you rebound from that, you’re looking at 50 per cent growth rates, 100 per cent growth rates in some cases.
“It’s really influencing the numbers and making Newfoundland and Labrador export numbers look spectacular.”
While the mining sector on the whole will suffer from stagnant base metal prices and remain in a holding pattern for what Hall expects will be two to three years, Vale’s ramping up nickel production at its Long Harbour processing facility will also enhance the province’s export increase.
One sector Hall says is overlooked but is expected to have a clear impact is export of seafood products, particularly to China, where the growth rates “have been consistently about triple the growth rates to anywhere else.”
As for the Atlantic Canada region, New Brunswick could see an increase of 10 per cent this year, and five per cent in 2018; Nova Scotia is forecasted to experience a one per cent jump in 2017 and six per cent in 2018; and Prince Edward Island, the only Maritime province to increase in 2016, may climb six per cent this year followed by four per cent next year.
Hall says it’s many of the same sectors fueling those increases, but notes the forestry sector, despite the fracas over the Canada-U.S. softwood lumber agreement, will benefit from a United States housing market still approaching its best days.
“There’s a lot of pent-up demand in the U.S. housing market and anybody who is in to softwood products and other elements of the building continuum is doing very well in spite of the countervailing duties or the anti-dumping duties that have been levied. They’re still quite profitable,” Hall said.
Overshadowing all of it, however, is the uncertain future of NAFTA.
Hall was in St. John’s on Thursday morning to meet with EDC customers and the No. 1 topic of conversation was the Canada-U.S. trade relationship.
“They were very concerned about NAFTA and what the end of a deal might mean, how the negotiations are going, how do you interpret the news stories on a day-to-day basis, is there any logic underlying this, what is America really aiming at?”
Because of the uncertainty around NAFTA, Hall says the EDC forecast of the Canadian dollar increasing in value over the next five years is raising a few eyebrows.
“Our view is that with commodity prices growing modestly over the medium-term period (and) with interest rates in the United States rising more aggressively than in Canada, we’re going to have fairly modest increases.”