Ontario on Track for Broad-Based Gains in Value of Its Exports
By A Correspondent
Increased U.S. demand and lower Canadian dollar are fuelling solid growth in all sectors
A favourable exchange rate and rising demand caused by a strong recovery in the U.S. economy will drive broad-based gains across all sectors of Ontario’s exports both this year and next, according to a new global export forecast released by Export Development Canada (EDC).
According to the Global Export Forecast Fall 2015, Ontario’s exports will grow by 11 per cent in 2015, led by the automotive and manufacturing sectors, both of which will see double-digit growth this year. Similar conditions will prevail next year, resulting in a further 6 per-cent increase in exports in 2016.
“The weaker Canadian dollar and much lower oil prices have, not surprisingly, shifted the centre of growth in Canadian exports to the manufacturing heartland, and Ontario is benefitting greatly from this,” said Peter Hall, Chief Economist at EDC. “Exports rebounded nicely in June and July after a slight weakening at the start of the year, putting Ontario on track for very healthy export growth in 2015 and again in 2016.”
Motor vehicles and parts make up more than a third of Ontario’s exports. EDC says they will rise 13 per cent in 2015 and a further four per cent in 2016, largely due to strong vehicle sales in the United States. The industrial machinery and equipment sector will experience a 16 per cent increase in exports this year as a result of increased demand from U.S. customers and a price advantage due to the lower Canadian dollar.
Metals, ores and other industrial products, which account for 21.5 per cent of Ontario exports, will see shipment values increase by seven per cent in 2015 and 2016, according to EDC. Gold exports are rising robustly, but steel export growth has been subdued because of lacklustre production volumes and increased competition from Chinese steel.
“Growth in most other export sectors in Ontario are also benefitting from the lower Canadian dollar and stronger U.S. demand,” said Hall. “This situation will continue in 2016 so there will still be solid growth, but the increase will not be as great as this year as the dollar effect dissipates and the growth in demand moderates.”
EDC is Canada’s leading provider of small business financing and insurance for companies with sales or business outside of Canada. Some of its services include the Export Guarantee Program to help exporters access more financing, Foreign Exchange Facility Guarantee to help exporters manage foreign exchange risk, and Political Risk Insurance that can cover up to 90 per cent of losses from political risks in foreign markets.
EDC’s economics team includes some of Canada’s leading trade experts, who share their knowledge freely with Canadian companies looking to grow their international sales and help them manage the associated market risks. Its semi-annual Global Economic Forecast addresses the latest global export conditions, including providing perspectives on leading economic trends and export strategies to help Canadian companies of all sizes maximize their export growth. The forecast also analyzes a range of risks for which exporters should be prepared.