OTTAWA, Nov. 22, 2012 /CNW/ - Export Development Canada's (EDC) forecast for Ontario's export growth calls for a 3 per cent gain in 2013 after recording a strong 7 per cent gain this year.

"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 Peter Hall, Chief Economist, EDC.

Ontario's exports depend on the industrial goods, motor vehicle and the machinery/equipment sectors, which together account for more than 82 per cent of the province's total international sales.

Ontario's motor vehicle sector accounts for more than 32 per cent of the province's total exports, and is forecast to eke out 2 per cent growth next year after a strong 14 per cent gain in 2012.

"Auto production will level off next year following the post-tsunami ramp-up at Toyota and Honda," said Hall. "Underlying growth will be spurred by 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."

The industrial goods sector generates over 37 per cent of the province's total exports. EDC expects industrial goods exports to hold steady at 2 per cent growth next year after a 3 per cent gain this year.

"Weak metal prices are restraining the province's industrial goods exports. Base metal prices are generally much weaker than year-ago levels, and are expected to remain softer through 2013, and precious metals won't fare much better," said Hall.

The machinery and equipment sector is also important to Ontario's export picture, responsible for 13 per cent of the province's total exports, and will see strong, steady growth of 6 per cent in both this year and next..

"Exports of M&E will post healthy growth rates both this year and next, with strong demand from both traditional and emerging markets. The expected surge of U.S. investment spending in 2013 will re-ignite traditional sales. Foreign sales of mining and agricultural equipment have been particularly strong, benefiting from booming global mining investment and vibrant world demand for food."

The high Canadian dollar and the global recession have had an eroding effect on Ontario's export sector, with the number of exporters decreasing from 17,504 in 1999 to 16,655 in 2010. Most other provinces also sustained significant declines in the exporter population during the last decade.

"While Ontario's decline is the largest in terms of the number of exporters, it is at the lower end of the range in percentage." said Hall. "Ontario is still trying to catch up with other provinces on the diversification front, with its share of exports heading to emerging markets rising from 4 per cent in 2007 to 6 per cent in 2011."

EDC's semi-annual Global Export Forecast addresses the latest global export conditions including perspectives on interest rates, exchange rates as well as export strategies to help Canadian companies minimize risk. It also analyzes a range of risks for which exporters should be prepared. The forecast is available on EDC's website at: http://www.edc.ca/gef.

EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by more than 7,700 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and a recognized leader in financial reporting and economic analysis.

SOURCE Export Development Canada