Ont. exports to rise moderately in 2009: EDC

Ontario’s export growth is expected to rise by a moderate three per cent in 2009 after a forecased 14 per cent decline in 2008, according to a provincial export outlook by Export Development Canada (EDC).

“Ontario will have a tough go through this year and 2009 given the importance of the auto and industrial goods sector on its export picture, both of which are faltering under the province’s heavy connection to the U.S. economy,” said EDC’s chief economist Peter Hall. “In 2009, while columes are not expected to fully rebound, export revenues will get a slight boost from the weaker dollar.”

American light vehicle sales are forecast to remain below 13.5 million units over the next 18 months, and production cutbacks caused passenger car exports to drop 26 per cent in 2008. Exports of auto parts are likewise forecast to decline 23 per cent in 2008.

In 2009, volume shipments of both cars and auto parts are forecast to increase by only five per cent, but value of these exports could increase moderately because of the weakness in the Canadian dollar. However, increased competition from international low-cost producers will curtail increases in auto parts producer prices, according to the EDC.

The export outlook for industrial goods sector, on the other hand, is forecast to decrease by seven per cent and four per cent in 2008 and 2009 respectively. The highly cyclical nature of the chemicals and plastics segment is one of the main reasons for this decline.

“Although the second half of 2008 and 2009 will clearly be a very tough period, the evolving global supply chain presents opportunities for Ontario exporters, particularly manufacturers of high value-added intermediary and final goods,” said EDC. “Mexican light vehicle production has been rising steadily over the years and presents an opportunity to tap into for auto parts suppliers. Large parts suppliers such as Magna and Linamar continue to seek out joint ventures in fast-growing emerging markets.”