Province’s 2011 export growth much better than expected, says economist
Economist Peter Hall predicts more modest export growth for Newfoundland and Labrador this year — 5.5 per cent — than its blistering 31.5 jump in 2011. — Photo by Daniel MacEachern/The Telegram
When Peter Hall last visited St. John’s, he had good news for the province.
But the chief economist for Export Development Canada — which forecast the province’s exports would jump 17 per cent in 2011 — was surprised things turned out even better than he’d predicted: a 31.5 per cent leap in total exports last year, a total of C$12.1 billion, good for an overall 2.9 per cent share of Canada’s total goods exported.
“(Commodity) prices were much stronger than we thought they were going to be,” he told the Telegram following his annual luncheon presentation, held in partnership with the Newfoundland and Labrador Environmental Industry Association. “We actually (predicted) diminishing prices in last year’s context as well. That didn’t materialize. What we saw was the Arab Spring, which moved prices up quite substantially in the early part of the year, so certainly from the oil and gas side of things, that was strong. We also saw that copper prices were higher than we thought they were going to be. We had expected a correction to occur; they stayed higher longer than we thought they would. That was true right across the base metal spectrum, so prices can do wonderful things to keep the overall numbers there, because we use numbers that have prices embedded inside of them for the forecast, so that’s a hard one to get right.” Hall added that volumes were also higher than EDC anticipated as well.
This year, the export credit agency is predicting more modest growth: 5.5 per cent, up slightly from its forecast last year for five per cent in 2012, and 6.8 per cent growth in 2013, due largely to an expected decline in oil production this year.
“The decline in production is mostly influenced by Hibernia, some by Terra Nova, and others partly offsetting that, but not enough to keep the numbers quite modest for this year,” he said. “And then, of course, we have prices staying about the same level for this year in terms of oil prices, and then falling five bucks next year.” The agency is predicting a price of $100 per barrel (using the West Texas Intermediate benchmark, different from the Brent crude figure the provincial government uses in its estimate this year of $123 a barrel).
Hall rejects what he says is the common wisdom now that wild market fluctuations are the new normal; with market indicators like housing and auto purchasing indicating the United States is pulling itself into recovery, he expects Europe’s financial turmoil to stabilize, and there is much potential for future growth. Canada’s relative stability means it stands to benefit from any recovery, but whether it will have the available skilled labour to take advantage is another story, he said.
“This is a huge problem for Canada, as far as I’m concerned, as somebody that has spent my life analyzing the fundamental dynamics of the Canadian economy,” he said. “I’ve got severe concerns about the labour force.” Skills development and immigration policies will have to be augmented to help Canada meet its growing labour needs, he said.