A growth-oriented forecast for Canada’s export markets in the coming year unveiled by the Export Development Corporation is giving Alberta businesses a shot in the arm.

EDC vice-president and chief economist Stephen Poloz says that while Alberta’s energy sector won’t likely see a rebound in exports until next year, a recovering global economy will boost exports in other sectors, including agri-food and industrial goods, by the end of 2002.

“The world economy is airborne again,” Poloz told a Calgary business audience last week, adding the Canadian economy will outperform the U.S. economy this year and next. “But I don’t think we’re going to go back to where we were two years ago, and we’re certainly not going to go there in a straight line.”

Canada NewsWire photo
The EDC's Stephen Poloz jokes that a ruler 'is an economist's best friend.'

The EDC’s forecast for Canada’s economy pegs growth at 2.5 per cent this year, bolstered by a two-per-cent hike in export sales. It says global growth will average 2.6 per cent this year, and 3.6 per cent in 2003.

After the terrorist attacks last September, EDC economists predicted two possible scenarios – a descent into recession or a delayed recovery lasting well into 2003. Six months later, the U.S. and global economies have outperformed even the most positive of scenarios, says the EDC’s global export forecast.

Poloz says business will spend more money, but in defensive investments designed to keep their operations going rather than expanding – and since companies may be less willing to bring back workers, it could be a “jobless” economic recovery.

EDC says Alberta’s energy sector will record a drop of between three and four per cent in exports this year, mainly due to lower average prices for natural gas and a projected decline in drilling activity. But energy exports – which represent more than 65 per cent of the province’s total exports – are expected to rebound and rise next year by 12 per cent due to an increase in both price and demand.

Forestry exports are anticipated to drop by three per cent this year, and rise nine per cent in 2003, while higher demand in the agri-food sector will increase exports 10 per cent this year and 14 per cent next year.

“In short, this is a transition year,” Poloz said.

The strongest recovery this year will be reflected in sectors including food (led by meat and prepared foods), industrial goods such as chemicals, plastics and fertilizer, aerospace, consumer goods, and engineering and professional services.

Telecommunications remains the biggest negative, said Poloz, adding: “It’s going to be all year before they find their bottom.” But things look brighter next year, with growth predicted at five per cent amid an improving investment climate.

One of the hottest markets for Alberta exporters over the next few years will be China, which is on track to double its size in 10 years, Poloz said. “It’s the biggest thing happening on your radar screen.”

EDC noted the biggest risks to the rosy forecast include the possibility of the economic slump in Japan spreading to other Asian markets, oil price increases due to escalation of tensions in the Middle East, and further moves towards protectionism through trade barriers by the U.S.

And if another major terrorist attack happens, advised Poloz, “all bets are off.”