Export growth limited by 23% drop in Canada's energy sector

Canadian export growth will be muted in 2015 as a 23 per cent drop in the value of energy exports wipes out gains in other areas, according a forecast from Export Development Canada.

Exports of aircraft and parts, motor vehicles and parts, industrial equipment, advanced technology, fertilizers and consumer goods are expected to surge this year as the falling Canadian dollar coincides with an expanding U.S. economy.

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U.S. consumer optimism and constraints in American industrial capacity are going to be a key driver of global economic growth for the next two years, according to EDC, which is Canada's trade development agency.

"Surging U.S. demand has gobbled up the spare capacity in its industrial machine," EDC chief economist Peter Hall said in a news release. "Producers are cash-rich, and are looking for new places to invest their surplus capital."

That will be good for all of Canada's manufacturing sector, especially aerospace and automotive, the EDC said in its report on the global export outlook.

Look to U.S. for growth

This is a good time to attract U.S. business investment, because of the low Canadian dollar, Hall said. At the same time, there is a deficit of U.S. housing and revival in consumer spending that will result in demand for consumer goods and housing components.

But energy exports will decline by $53 billion in 2015, though overall Canadian crude oil shipments to the U.S. are set to rise, but the price of oil is at least 35 per cent less than last year.

That will result in one per cent export growth for the year, despite double-digit growth in other sectors, EDC said.

It forecasts seven per cent Canadian export growth in 2016, and growth in global exports of 3.5 per cent.

The tentative recoveries in Europe and Japan should help boost exports, though China is likely to import less.

EDC's optimism about global export growth is cautious.

"Even though growth is back, businesses and investors should be aware of the risks that are still out there," Hall said.

"Despite significant progress, there's still a serious fiscal situation in Europe. Commodity prices are unstable. Geopolitical risks abound in Russia, the Middle East, and central Africa, to name a few. These risks and others should always be considered and, where possible, mitigated."