Prince Edward Island export sales are expected to grow by two per cent this year, reversing a six per cent drop last year, according to a provincial export outlook from Export Development Canada (EDC).
"If exporters can successfully negotiate higher Canadian dollar prices, growing U.S. consumer demand should drive P.E.I.’s traditional agri-food sector to more modest levels, particularly in 2005," says EDC senior vice-president and chief economist Stephen Poloz.
Almost 75 per cent of P.E.I.’s total exports are from the agri-food industry. As agri-food dominates the bottom line, a weak forecast for related exports will hold back strengthening in other areas. Agri-food exports are projected to remain flat in 2004, but will rise by four per cent in 2005.
Improved currency dynamics this year should enable P.E.I.’s raw potato exporters to regain some market share lost to European producers in 2003. However, bumper crops have lead to an oversupply of product that is expected to see prices weaken in the key U.S. market. As for manufactured and frozen potatoes, exports will remain relatively flat in 2004, though prices and demand will be supported by a strong U.S. consumer. Seafood exports will be lackluster this year, due to fluctuating catches and some uncertainty about processing on the island. Exports of lobster and muscles will see prices hold, while the outlook for crab prices and export volumes is favorable.
Although P.E.I.’s transportation sector makes up four per cent of the province’s total exports, it is still an important contributor to the diversification of exports outside of agri-foods. Exports in this sector are characterized by the overhaul and maintenance of aircraft engines, along with the export of rail equipment. Export sales are projected to grow by eight per cent in 2004 and a further 11 per cent in 2005, rebounding from a 14.8 per cent decline in 2003.
Finally, industrial goods exports are expected build on a strong performance last year with projected growth of seven per cent in 2004 and an additional three per cent growth next year. The strong performance is due primarily to increased demand from the U.S.
P.E.I. export sales decreased by 6.4 per cent in 2003 to $640 million. Agri-food accounted for most of the province’s exports at $477 million, followed by industrial goods at $42 million and transportation at $26 million. All other goods totalled $94 million. The U.S. was by far PEI’s largest customer in 2003, buying $569 million of exports, followed by the European Union at $25 million and Central America at $17 million.
Nationally, the Canadian economy is expected to grow by three per cent in 2004 and by 3.3 per cent in 2005. Export sales should increase by six per cent in 2004 and by two per cent in 2005.
A copy of EDC’s semi-annual Global Export Forecast is available on EDC’s web site: (http://www.edc.ca/docs/ereports/gef/EFindex_e.htm)
EDC provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets. Founded in 1944, EDC is a Crown corporation that operates as a commercial financial institution.