A turnaround in export performance is not expected until the middle of next year at the earliest, says an Export Development Corporation (EDC) forecast.
“Businesses and consumers now face unprecedented levels of uncertainty and risks as the implications of Sept. 11 for the global economy have yet to be fully realized,” says Stephen Poloz, EDC vice-president and chief economist.
The EDC is advising Canadian exporters to plan for two possible scenarios, he said: delayed recovery and a recession.
Under the former, Canadian export sales are expected to contract four per cent this year, recover slightly and grow by about one per cent in 2002.
Under the latter, export sales would contract seven per cent this year and decline a further six per cent in 2002.
Nearly all Canadian export sectors face continued lower growth prospects, regardless of which scenario emerges. Sectors expected to be hardest hit include energy, telecommunications and computers.
The EDC report says energy exports will suffer because of cutbacks resulting from the Sept. 11 attacks.
Exports are expected to weaken further next year, despite a gradual recovery in demand in the U.S.
Under the delayed-recovery scenario, energy sales would fall by 12 per cent, but in a recession scenario would fall by 38 per cent, given the attendant drop in global energy prices. Telecommunications export sales are likely to drop next year by between six and 10 per cent, depending on the severity of the global slowdown. This follows a 30-per-cent decline this year.
Export sales to the U.S. are expected to remain flat for 2002 under a delayed-recovery scenario and contract by eight per cent in a recession scenario. Provincially, says the EDC, the clearest evidence of slower export sales this year will be seen in Alberta and Quebec as several key industries are forecast to post negative growth prospects in 2002.
Adds Mr. Poloz: “These are indeed very difficult and challenging times for Canadian exporters. Now more than ever, companies should ensure that their business plans include whatever risk-management strategies necessary to protect the bottom line.”
A copy of EDC’s semi-annual global export forecast is available at www.edc.ca. The report provides a comprehensive analysis of global economic and political developments as well as detailed analysis from a provincial and sectoral perspective.
The EDC is a Crown corporation that provides trade finance and risk-management services to Canadian exporters and investors.
