A surging US economy is powering Ontario's export growth into 2015, says a new report by Export Development Canada (EDC). Principal in that growth is Ontario's industrial machinery sector, which is being driven to new heights by strong demand south of the border. Exports in the sector are projected to grow by 10 per cent this year, and jump to 17 per cent in 2015, making it the biggest mover in Ontario's economic forecast.
Overall, EDC's new outlook calls for Ontario exports to increase by 7 per cent in 2014 and 5 per cent in 2015.
"Tight industrial capacity stateside is igniting US business investment well ahead of the normal timetable," said Peter Hall, Chief Economist, EDC. "Ontario's industrial machinery industry is well-positioned to service this higher demand. Rising US industrial output will also boost Ontario's chemicals and plastics industry to 12 per cent and 5 per cent export growth in 2014 and 2015, respectively."
Ontario's key manufacturing sector also stands to be a major beneficiary of the strengthening recovery in the United States, predicts Hall. The auto sector has seen surprisingly strong growth this year and is nearing pre-recession production levels with continued growth forecast for 2015.
"Auto-sector growth surprised on the upside this year," says Hall. "It could happen again in 2015, as US vehicle sales have significant room to grow. However, without considerable new investment, Ontario is bumping in to capacity constraints that will limit auto-sector export growth next year."
EDC is calling for the sector, which accounted for 35 per cent of the province's total exports in 2013, to expand by 8 per cent in 2014 and another 3 per cent in 2015.
"Considering the competitive factors and capacity constraints, the sector is continuing to perform well," said Hall. "A lower Canadian dollar and increasing US auto sales will help to support the industry's growth, but it will continue to face competition from Mexico and southern US states."
Hall points out that the assembly industry has recovered somewhat from the 2008-09 recession when vehicle production fell to 1.4 million units. In 2014, it is expected to reach 2.3 million units.
Mining and metals, the province's second largest sector, is forecast to grow by 3 and 6 per cent in 2014 and 2015 respectively. The gold mining industry will continue to experience strong growth in production during 2014 and 2015, although lower commodity prices will put pressure on future production plans.
EDC's semi-annual Global Export Forecast addresses the latest global export conditions including market- and sector-specific insights to help Canadian exporting companies grow their international sales. It also analyzes a range of risks for which exporters should be prepared. Read EDC's Global Export Forecast.
EDC is Canada's export credit agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public- sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment.