Export Development Canada is predicting Newfoundland and Labrador exports will drop by half in 2009 and rebound only 7% in 2010.
“Newfoundland and Labrador will have a tough go in 2009 as massive commodity price declines and production cutbacks lead to high double digit drops for energy, industrial goods, and forestry exports,” said Peter Hall, Chief Economist of EDC.
“In 2010, gains in prices for key commodities like crude oil and iron ore will lift the value of the province’s exports, but volumes will likely weaken again as crude production continues to fall. Ongoing mega construction projects mean the long-term outlook is bright, but the export benefits of these projects lie largely beyond 2010.”
While oil prices started the year well above the EDC forecast of USD 47 per barrel, they may be right about production declines over the course of the year. Other economic forecasts have shown a forecasted 15% drop largely due to downtime at the three production platforms for regular maintenance.
No one appears to have forecast the effect a drop in demand would also have on production levels. According to figures from the offshore regulatory board, cumulative production in the first three months of calendar 2009 is down about 5% from the same period in 2007 and 2008.
The fishery is also expected to take a hit:
The agrifood sector accounts for 6 per cent of the province’s total export picture. While commercial fishermen have seen the combined pressures of high oil prices and a high CAD disappear since last year, faltering demand in the wake of the global recession has now set in. This will drive agrifood exports down 4 per cent in 2009 before a modest price increase adds to the underlying strength in the emerging aquaculture sector.
Exports of farmed salmon and steelhead trout could see tremendous upside as a result of the province’s significant coastline and ongoing investments. EDC does not anticipate any major quota adjustments for key species such as crab or shrimp through 2010, but there is some upside for landings of lesser valued ground fish.
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