Pranking Canada's Trade Regions
International trade will be a key growth driver for the Canadian economy this year and next. However, the distribution of export growth in Canada's provinces is anything but even. Some are leading the charge, while others are steady at the national pace. Others are lagging behind, some quite seriously. What are the key factors influencing the different growth patterns?
On top of the heap are British Columbia and Nova Scotia. Surging forestry exports are a big reason that B.C. will see 12 per cent growth this year and a further 11 per cent in 2014. Wood shipments to the reviving US market will add to the robust increase in exports to China. BC will also get a solid boost from mineral exports, thanks to new mining production. Nova Scotia will see the same growth rates, except the years are flipped around. It's largely an energy story for Nova Scotia, with Venture and Deep Panuke causing output to double this year and double again in 2014. The return of NewPage supercalendered paper production will boost forestry exports by 15 per cent in 2013.
Next in the rankings is Newfoundland and Labrador. Expanded iron ore capacity is behind back-to-back 20 per cent increases in exports of industrial goods. Energy exports will recover this year from a maintenance-related drop last year, rising 13 per cent. Growth will slow sharply to just 2 per cent in 2014. However, gains in the province's less-dominant sector will be enough to raise exports by 11 per cent this year and 6 per cent in 2014.
Manitoba is just a hair behind. A diversified export base will capitalize on the US rebound, rising 12 per cent this year. All industry sectors will see growth at or close to double-digits. Things are not as good next year, with the influential agri-food and industrial goods sectors slowing to a crawl.
In the middle of the pack is Alberta. The forecast is dominated by the outlook for energy exports, which make up almost three-quarters of total provincial shipments. Transportation capacity remains an issue, weighing on both price and volumes. The middle ground is shared with Quebec. Back-to-back double-digit gains in aerospace exports are an obvious growth driver, reflecting strong demand for commercial aircraft and the start of C-series production. However, don't cut out the solid activity in machinery and equipment, agri-food and forestry exports. Ontario is mid-pack this year, in spite of relatively weak auto sector shipments, but softness will weigh more heavily on growth in 2014. Machinery and equipment exports are the exception, with back-to-back 8 per cent gains.
Saskatchewan will see the largest tumble in growth in 2014. A sharp drop in potash shipments will hold overall exports flat in 2014, after a decent 8 per cent gain this year. New Brunswick is also one of the weak ones. Closure of the Brunswick Mine pulls New Brunswick to the bottom of the rankings this year, while flat energy exports hold the provincial growth rate back in 2014.
For the provinces, this disparate growth is more of the same. Last year, the top province grew 15 per cent, while the bottom province shrank by almost as much. In the mix, there were five provinces with outright declines in exports, while the other five grew. As always, growth rates were subject to large fluctuations in particular industries. Economic circumstances dictate that for the time being, that'll probably be the best we can expect, until true recovery sets in.
The bottom line? The provincial trade story is choppy - but lately, that's nothing new. That makes forecasting tricky at best, subject as it is to unexpected shifts in activity. But we expect as US growth revives, a good chunk of the volatility will fade, making things somewhat more predictable.