Ontario export growth to slow in 2013, Quebec’s to accelerate slightly: EDC

Export Development Canada expects Ontario’s export growth will slow significantly in 2013 after this year’s strong recovery, while Quebec is expected to post a modest increase.

The federal agency expects Ontario exports to be three per cent higher in 2013 over this year, down from the robust seven per cent growth forecast for 2012.

EDC expects Quebec to post four per cent growth next year, after this year’s three per cent growth.

Part of Ontario’s strong growth this year is due to the auto sector’s recovery from parts shortages caused by Japan’s earthquake and tsunami in March 2011 and severe flooding in Thailand in November 2011.

“While slower growth in auto production and weaker commodity prices will restrain Ontario’s exports overall in 2013, the weak headline growth masks a stronger underlying trend across a number of other key industries in Ontario,” said EDC chief economist Peter Hall.

Ontario’s automotive sector accounts for 32 per cent of the province’s exports.

The sector is expected to see a strong 14 per cent gain this year as Toyota and Honda ramp up their Ontario plants, which export much of their production to the United States.

But next year, EDC is calling for a two per cent gain in that sector, with the underlying growth driven by Toyota’s production of a new Lexus model in Cambridge and a steady rise in U.S. vehicle sales.

“Ontario’s ability to capture U.S. sales will be limited by a reduced presence of Ford and GM in the province, Hall said.

The machinery and equipment sector is expected to see strong, steady six per cent growth this year and next, while the industrial goods sector is expected to post two per cent growth next year after a three per cent gain in 2012.

EDC expects weak metal prices to eat into the exports of both provinces, particularly Quebec.

“Quebec’s export numbers are being decimated by weak prices for aluminum and iron ore and flat precious metal prices,” Hall said.

“Output gains in each of these segments paint a totally different picture of activity.”

Indeed, EDC points to many output increases on the horizon.

For instance, a strike at Rio Tinto’s aluminum smelter north of Quebec City has been resolved and there’s an expansion underway at Aluminerie Alouette.

In addition, the EDC says gold production is expected to increase from Osisko’s Malartic mine and Agnico-Eagle’s LaRonde mine. And ore from New Millennium’s iron mine is expected to grow next year.

Quebec’s industrial goods sector – which encompasses metals, chemicals and pharmaceuticals – is expected to grow three per cent this year and one per cent in 2013.

The province’s machinery and equipment sector is forecast to grow 11 per cent this year and six per cent next year, while transportation is set to gain one per cent this year before rebounding six per cent next year thanks to the developments in the aerospace industry.