Forecast: Province set to see 19-per-cent growth in exports in 2010, largely thanks to the energy sector: Export Development Canada

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REBECCA PENTY
Telegraph-Journal

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MONCTON - New Brunswick is poised to lead the nation in export growth next year, according to a forecast released by Export Development Canada Thursday.

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Peter Hall

The province is set to see a 19-per-cent growth in exports in 2010, largely thanks to the energy sector, after posting a decline of about 29 per cent in 2009, the bank says.

Chief economist Peter Hall said the numbers look promising but growth is concentrated in the energy sector, which accounts for 68 per cent of the province's exports.

"We're talking about the throughput at the existing refinery, we're talking about new production coming on stream with Canaport LNG and we're talking about refurbishment of Point Lepreau as well," Hall said in an interview at Moncton's Delta Beauséjour hotel, a scheduled stop on his national tour to present each province's export forecast.

Energy exports are estimated to have fallen by 36 per cent this year but should be boosted by 28 per cent in 2010, due to new liquefied natural gas operations, the Point Lepreau refurbishment and improved prices and demand for refined petroleum.

"When you actually take the energy sector numbers out of the picture, then it becomes much more like an average Canadian situation: 15 per cent drop this year in activity and five per cent increase next year," Hall said.

The bank assumes the refurbishment of the Point Lepreau nuclear plant will be finished next year, but delays have pushed the target date for completion to February, 2011, according to NB Power and Atomic Energy of Canada Ltd., which is leading the project.

The bank predicts that all provinces but Prince Edward Island will see declines in export growth in 2009.

But in late 2010, Export Development Canada forecasts the beginning of some good news, with a full economic recovery expected in 2011.

The bank puts New Brunswick far ahead of its Atlantic Canadian neighbours next year: Nova Scotia should see export growth of nine per cent and Prince Edward Island of three per cent, with Newfoundland and Labrador posting a two-per-cent increase.

Beyond energy, other industries in New Brunswick will continue to have a hard time selling products abroad.

The forestry sector, which typically accounts for 11 per cent of the province's exports, is forecast to see a decline in exports of 17 per cent in 2009 before exports grow by a meagre four per cent next year.

"If we believe recovery is going to happen in 2011, which we do, it's going to take awhile for that recovery to soak up excessive inventories of newsprint and other papers and pulp inside the system, before prices start to rise again and throughput is back on its feet," Hall said, adding that lumber demand should strengthen sooner than pulp and paper.

"On the lumber side, that's a much more instant response," he said, pointing to the expected affect of new home building in the United States beginning just over a year from now.

"We believe that keeping up with the levels of activity that are going to occur in 2011 is going to be a big challenge for the (lumber) industry."

The agri-food sector will remain a mixed story for 2010, the bank predicts.

U.S. consumers, which are responsible for much of the demand for high-end shellfish products such as lobster, continue to shun fancy restaurant dining, Hall said.

"Demand for those things is going to be a little bit more constrained and that will definitely persist throughout 2010," he said, but pointed out potato sales are projected to do quite well next year.

"There has been substitution to more basic foods by consumers right now that's actually sparking demand for potatoes and there has actually been a shift to more fast-food type restaurants.

"They haven't been hit relatively as hard as the high-end restaurants."