Oil prices seen masking Canada "export recession"

Thu Jul 24, 2008 1:54pm EDT
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OTTAWA (Reuters) - Oil prices will continue falling and dip below $100 a barrel by the end of this year, unmasking an "export recession" in Canada that will result in anemic growth, a government export agency said on Thursday.

Export Development Canada forecast export growth this year of 4.2 percent in terms of value. But that is an artificially pretty picture based entirely on the dramatic surge in oil prices, EDC said in its quarterly Global Export Forecast.

Canada is a net exporter of crude oil and the top energy supplier to the United States.

In April, the EDC forecast 2008 export sales would decline 2 percent but Peter Hall, vice-president and chief economist at EDC, emphasized that the new forecast, while appearing more bullish, is far from it.

"It really is masking an export recession that we've got going right now," Hall told Reuters.

In volume terms, he sees exports falling 4 percent.

"That's a grave turnaround of events. That 4 percent drop in volume activity is in spite of the fact that volumes in the agri-food, energy and fertilizer sectors have been robust and so the number, absent those sectors, is actually worse," he told Reuters.

For 2009, the agency sees total exports falling 1.2 percent in value but a 1 percent rise in volumes.

That outlook is based on expectations of a sharp downturn in oil prices, the spill-over effects from the U.S. subprime crisis, the impact on consumers of soaring prices and a global slowdown that is now spreading to major emerging economies such as China and India.   Continued...