The dramatic drop in oil and gas prices will lead to a 17% fall in Alberta's export earnings in 2015, but partial price recovery and volume gains will help overall exports rebound in 2016 to the tune of 19% growth, according to a Export Development Canada (EDC) forecast.
"This will be a difficult year for Alberta exports, but there is light at the end of the tunnel," said Peter Hall, Chief Economist, EDC. "The continued revival of the global economy, driven by US growth, and the anticipated rise in oil prices back to the US$70/bbl level will fuel the expected turnaround next year," added Hall.
The forecast predicts a 25% drop in energy exports and a 23% drop in natural gas exports this year, which is significant for an economy that depends on energy for nearly 75% of its export revenue.
However, the energy sector is expected to bounce back with 27% growth in 2016, while natural gas will stage a significant yet less dramatic comeback with 9% growth in 2016 due largely in part to increased shale gas capacity in the US.
Outside of energy, the export story is positive for Alberta. Exports from sectors such as agriculture, machinery and equipment, and chemicals and plastics will collectively see 7% growth in 2015, followed by 3% growth in 2016.
"Energy receives all the headlines but it's great to see positive growth in other sectors," said Hall. "Diversification is an important insulator, one that can protect an economy against seismic shifts in any one sector of the economy, like we're seeing right now with energy."
"Alberta will always be about oil and gas, but it helps to develop strength in other sectors that can fill in when commodity prices are down."
Access EDC’s Global Export Forecast here.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/21052015/oil-and-gas-price-recovery-to-boost-alberta-exports-in-2016-817/