This year has already made history. As far back as the records go, Canadian exporters have not seen a worse year than 2009 – by a factor of five, no less. Canada’s recession was indeed an imported one, and the decline in activity is so dramatic that no single province but the smallest has escaped its effects. Even so, there are differences in each province’s experience, and in the outlook for 2010.
Pan across estimated performance for 2009, and export losses in certain provinces seem impossibly severe. Declines of 29% in New Brunswick, Saskatchewan and British Columbia, topped by a 36% plunge in Alberta, and an unthinkable 44% drubbing in Newfoundland. The magnitude almost seems impossible, until put in proper context. By and large, this year’s big losers saw banner performances in 2008 – for Newfoundland, a 27% increase, a stunning 34% gain in Alberta. But nothing matched the drama of Saskatchewan’s explosive 55% surge. These gyrations reflected movements in the prices of key commodity exports, which settled down again this year after their late-boom spike.
Unfortunately, not all provinces had such well-padded declines. Prior to this year’s plunge, British Columbia saw just 5% growth in 2008, as overall performance was weighed down by the front-running plight of the lumber industry. Nova Scotia’s 24% drop this year was preceded by a relatively slim 7.6% gain in 2008, which itself reflected early weakness in the lumber and fishing industries. Quebec’s growth was stunted in 2008 by a sharp drop in aluminum exports. However, Ontario entered the downturn in the weakest position. The early woes of the auto sector led to a 7.7% drop in exports last year, the weakest performance among the provinces, and the only region to post a decline.
For most provinces, next year’s performance will be variations on a modest national trend. With the world economy forecast to plod through the rough country that bridges recession and recovery, export performance will largely be on hold across the country. New Brunswick is a notable exception, powered by completion of a large liquefied natural gas project and completion of a large electric power project. On the other end of the spectrum, sluggish global growth and weak food and metals production will constrain Saskatchewan and Manitoba to just 1% growth in 2010. Declines in oil production will hold Newfoundland and Labrador to 2% growth – weakness that stands in contrast to the investment-led impressive growth of the overall economy.
In the middle of the pack, Alberta will see 8% export growth in 2010, thanks to a partial rebound in energy prices. Nova Scotia will also see energy-price-related gains, and will also benefit from the beginnings of an auto sector recovery to the tune of 9% growth. Ontario exporters will take their first steps toward recovery, with an 8% increase that reflects modest improvement in the auto sector, chemicals and base metals industries. Overall, the export recession will prove to have been hardest on Newfoundland and Labrador, British Columbia and Ontario when 2010 export levels are compared with 2007. The Territories, Prince Edward Island and Saskatchewan will be the regions least scathed by the worst global recession since the Great Depression.
The bottom line? There are no winners among Canada’s provinces and territories in the current global recession. Exports have been affected everywhere, and it will take a strong recovery to lift exports in most provinces back to pre-recession levels. Foreseeable, but not before 2011.