Ontario remains the single biggest exporting province, contributing more than one out of every three dollars Canada earns by selling goods and services to other countries. And since exports help to drive Canada’s overall economic growth, continued healthy growth in Ontario’s exports is good news for all Canadians. As EDC’s latest Global Export Forecast shows, there’s a lot of good news to report.
Ontario is clearly a major beneficiary of the weaker Canadian dollar and lower oil prices, which has shifted the centre of growth in Canadian exports to Canada’s manufacturing heartland. The province’s highly diversified economy is also benefitting from a gathering recovery in the United States, which accounts for almost 80 per cent of Ontario’s export revenues, where the favourable exchange rate gives many Ontario companies a competitive price advantage in the U.S. market.
Overall export growth in 2015 is on track to be a robust 11 per cent, led by a significant increase in the motor vehicles and parts sector. Metals, ores and other industrial products – which make up more than one in five export dollars earned by Ontario – are up seven per cent, while chemicals and plastics are up eight per cent.
Things look set to continue into 2016, although not at quite as brisk a pace as this year as the dollar effect begins to moderate and demand growth eases slightly. That said, vehicle sales to the United States are expected to continue at multi-year highs, which should result in a four-per-cent increase in exports by that sector over this year’s already much higher levels. Growth in Ontario’s metals sector, including robust exports of gold despite softer prices, will lead to a seven-per-cent gain, while the chemicals and plastics sector will also see seven-per-cent growth next year.
EDC forecasts Ontario’s overall exports to grow by a healthy six per cent in 2016, led again by strong demand from the United States on three fronts: increased consumer spending, a rising housing market and very tight capacity constraints at U.S. companies which, in turn, are using imports to help meet demand. Once again, what’s good for Ontario will be good for the rest of Canada, as the province’s growing exports are expected to play a big part in helping boost Canada’s overall GDP by 2.3 per cent next year.
If you’d like to learn more about the export prospects for Ontario or any other province, or for a particular sector, you’ll find that information in EDC’s Global Export Forecast Fall 2015, which also summarizes the principal factors affecting the global economy.