OTTAWA (Reuters) - The weak world economy and natural disasters mean Canada's exports will not return to pre-recession levels until mid-2012, about half a year later than expected, the country's export credit agency said on Monday.
Export Development Canada (EDC) also cut its export growth forecast for 2011 to 11 percent from the 12 percent it forecast in May. It kept its forecast for 2012 at 7 percent.
Canada is enormously dependent on exports, which accounted for around 30 percent of gross domestic product in 2010. Just under 75 percent of all exports go to the United States.
The sector has been hit by the sluggish U.S. economy, a strong Canadian dollar, tough foreign competition, unrest in North Africa, and natural disasters. Last week, the Bank of Canada said exports would continue to be a source of weakness.
EDC chief economist Peter Hall took a more upbeat line, saying exports have been remarkably resilient.
"The recession wiped out one-quarter of our trade, but by mid-2012, we will have recovered all of the momentum lost in the global downturn," he said. In May, he forecast exports would return to pre-crisis levels by the end of this year.
Despite the challenges, Hall said he was encouraged by the fact that consumers were paying down debt, housing markets were slowly healing and orders were growing.
He also said Canadian exporters had "found very creative ways of living with an appreciating currency" such as increasing diversification, moving some production offshore and cutting costs.
Canada is a major commodity producer and Hall said shipments of oil, gas and metals would be hit by lower prices in 2012. This would be balanced by increased exports of autos to the United States and increased aerospace shipments.
Hall also predicted the world economy would recover gradually and hit pre-crisis growth levels in the latter half of 2012, about a year later than EDC had initially expected.
"The shocks that we are still experiencing this year ... have depressed economic activity and delayed the balance point," he told Reuters.
"When the world economy is going sideways it's very vulnerable to any shock that comes along."
The EDC forecast Canadian growth next year of 2.3 percent. The Bank of Canada last week put the 2012 growth figure at 2.1 percent.
Reporting by David Ljunggren; editing by Peter Galloway