My Business News

Canadian exports will remain “hobbled” by the weak world economy until the second half of 2010, Export Development Canada cautioned Thursday.

Peter Hall, the chief economist at EDC, said the world economy is working off the excesses that have built up in recent years.

“Unfortunately, the pile was so high that we still have a way to go before balance is restored in the latter part of next year,” Hall said.

EDC still expects Canadian exports will retreat by 21 per cent this year, and that shipments will remain low in 2010. Exports will be crimped by the global economy, which is now forecast to contract by 1.7 per cent in 2009, and then grow by a modest 2.7 per cent in 2010.

EDC’s spring 2009 forecast had predicted a 1.3 per cent contraction in 2009, followed by 2.3 per cent growth in 2010.

Commodities are expected to see the biggest drop in export sales, with energy, fertilizers and base metals sustaining an average decline of 38 per cent, according to the EDC.

The auto sector is expected to match 2008’s decline of 22 per cent, due to weak demand in the United States and the restructuring underway in the sector.

Meanwhile, the forest industry is forecast to continue sliding, with a 14 per cent drop as pulp and lumber shipments falter.

“Exporters will be partly shielded by a weak Canadian dollar which we forecast to hover in the 83 [to] 85 cent [US] zone over the next 18 months,” said Hall. “But true recovery will not come until 2011.”