Canada's trade picture to darken in 2009, EDC says
Canada's trade picture will darken in 2009 because of lower oil prices and a slowing world economy, the Export Development Corporation said on Thursday.
The value of Canada's exports should slip one per cent next year as economic factors play havoc with the country's ability to sell products and services overseas, the Crown corporation said in its latest global export forecast.
"There hasn't been much good news for Canadian exporters. Losses due to the U.S. sub-prime crisis, the impact of soaring commodity prices upon consumers continues to increase, and proof of slowing global production is rampant," said Peter Hall, the EDC's chief economist in a news release.
In 2008, Canada will sell approximately four per cent more goods and services than it did last year, according to the EDC forecast. Once higher oil prices are factored out however, exports in fact will fall by four per cent this year compared to 2007, Hall said.
That is because Canada's overall trade balance has benefited from soaring global crude oil prices.
Next year, however, reduced global economic activity should cut the demand for the commodity, according to many experts. The EDC expects crude price to fall from the current level of approximately $125 US a barrel to $84 in 2009.
By comparison, CIBC economist Jeff Rubin is predicting oil prices will hit about $150 a barrel next year.
If the EDC's oil forecast is correct, lower crude prices would cut the value of Canada's oil exports.
Canada exports many products by sea(Rob Short/CBC)The Canadian dollar should roughly maintain its current value, the EDC report said.
The organization expects the currency to stay close to the American dollar in value, at between 94 cents and 97 cents US. The higher value of the Canadian dollar tends to reduce inflationary pressures in this country but also crimps our ability to export goods and services.
In terms of sectors, the country's food exporters should see gains next year as global demand for foodstuffs continues to increase, EDC predicted. But, a poorer showing by the automotive, forestry and consumer goods sectors will drag on Canada's exports, the group said.
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