Exports expected to fall 22 per cent in ’09

Canadian exports are expected to endure their worst decline in decades this year, falling 22 per cent before a modest recovery in 2010, Export Development Canada said Wednesday.

MONTREAL — Canadian exports are expected to endure their worst decline in decades this year, falling 22 per cent before a modest recovery in 2010, Export Development Canada said Wednesday.

“What we’ve got right now is a drop in global demand that is very pervasive, so that’s affecting the volume of exports,” EDC chief economist Peter Hall said in an interview from Quebec City.

Exports should enjoy a “tepid” growth of seven per cent in 2010, something Hall described as “baby steps.” That’s less than the normal eight to nine per cent annual growth and nearly 12 per cent spurt that typically marks a recovery.

Canada’s economy is expected to shrink by two per cent in 2009, followed by a 1.7 per cent increase in 2010.

“In order to get ourselves out of the canyon that we’re in right now, it’s going to take a whole lot more growth than the seven per cent that we’re forecasting for next year,” he added.

Declining exports will particularly affect the mining, chemical and forestry industries.

The bulk of Canadian exports go to the United States, that is enduring a severe economic and financial crisis. Weak housing starts are hurting Canadian forestry exports, while the auto crisis is hampering chemical and aluminum companies.

Every Canadian province except Prince Edward Island will see double-digit declines this year, Hall said.

Quebec exports are forecast to decline by 15 per cent in 2009 before rising by two per cent the following year.

A weaker Canadian dollar will absorb some of the sting of the dropping business.

Industrial goods account for 37 per cent of the province’s total export picture as tumbling commodity prices have resulted in mine, smelter and mill closures.

EDC expects the average price of aluminum will fall to US$1,900 per tonne after averaging US$2,500 in 2008.

That’s bad news for thousands of Quebec jobs that rely on the aluminum sector. Global giants such as Rio Tinto Alcan (NYSE:RTP) and Alcoa (NYSE:AA) have already reduced capacity and laid off thousands around the world to offset market softness.

Quebec’s industry goods exports are forecast to drop by 28 per cent in 2009, before regaining 10 per cent the following year. The forestry sector, which accounts for 14 per cent of the province’s total exports, is expected to decline by five per cent this year and a further three per cent in 2010.

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