Low oil prices taking toll on exports from Western Canada: EDC

11/5/2015

CALGARY, Alberta -- Alberta and Saskatchewan will have lower exports this year due to depressed oil prices but will rebound in 2016 through a partial price recovery and volume gains, according to a new global export forecast released by Export Development Canada (EDC). Manitoba will also see declines in its energy exports in 2015, but gains in other important sectors will offset that and give it a modest increase in overall exports. All three provinces will enjoy export growth in 2016.

According to the Global Export Forecast Fall 2015, Alberta's overall exports will slump 23% in 2015, due to a 30% drop in exports of energy, which accounts for more than three-quarters of the province's exports. Saskatchewan, which relies on energy for about 40% of its exports, will also see a significant decline—43%—in that sector, but strong growth in exports of fertilizers and agri-food will greatly moderate the effects on its overall export performance. Manitoba's energy exports will be down 24% this year, but as energy is a much smaller share of exports than in the other two provinces, the effect on its overall exports is much less.

"There's no question that low oil prices are having a major impact on exports from Western Canada, especially Alberta," said Peter Hall, chief economist at EDC. "But Saskatchewan and Manitoba are showing how provinces with a more diversified range of exports can soften the blow caused by declines in one sector."

Rebound

EDC says Saskatchewan's agri-food exports, which roughly equal the value of its energy exports, are set to rise 10% in 2015, while fertilizer exports will increase by 38%. In Manitoba, the greatest positive contribution to its exports will come from shipments of pharmaceutical products, along with gains from manufacturers. Alberta's non-energy exports are also seeing a slight increase—1%—in 2015 and will post a further 4% gain in 2016.

"Manitoba and Saskatchewan are also more diversified than Alberta in the markets they sell into," said Hall. "While the United States accounts for more than 90% of Alberta's exports, it's only about two-thirds of the market for the other two."

A rebound in energy exports in all three provinces next year will also help them raise their overall exports. Alberta will see a 20% increase in energy exports and a 15% increase in overall exports; Manitoba's energy exports will climb 15% and overall exports by 6%; and Saskatchewan will enjoy a 13% increase in energy exports and a 5% jump in overall exports.

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