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Workers inspect cars moving along assembly line at a Honda manufacturing plant in Alliston, Ont.Fred Thornhill/Reuters

A new forecast predicts Ontario and Prince Edward Island will lead all provinces with 7 per cent growth in exports this year, thanks to a resurgent auto sector, high demand in the United States and a low Canadian dollar.

In its semi-annual outlook, Export Development Canada predicts Ontario's automotive sector, which accounts for nearly 40 per cent of the province's exports, will grow by 10 per cent this year, bolstered by a record-high demand for light vehicles in the United States.

The EDC says Ontario's exports of industrial machinery and equipment will rise 9 per cent this year, while shipments of metals, ores and other industrial products are expected to grow by 5 per cent.

The report says exports from Prince Edward Island are expected to grow by 7 per cent, thanks to the aerospace industry.

At the other end of the scale, the EDC predicts exports from Newfoundland and Labrador will drop by 11 per cent and by 10 per cent in Alberta due to continuing low prices for natural gas and crude oil.

The same factors are also expected to cause a 6-per-cent drop in exports from New Brunswick and 3 per cent shrinkage in Saskatchewan despite strong performances by non-energy industries. The EDC also predicts exports will rise 6 per cent in Nova Scotia, 5 per cent in Quebec, 4 per cent in Manitoba and a modest 2 per cent in British Columbia.

On a national basis, the federal agency predicts Canadian merchandise exports will grow at a tepid pace of just 2 per cent this year with negative growth in the energy, fertilizer, chemicals and plastics sectors. In 2017, the EDC predicts a gradual strengthening of natural gas and crude oil prices will steer Canadian exports toward a 6-per-cent expansion.

"High income growth, high employment, rock-bottom gas prices and considerable pent-up demand caused by post-recession thrift are all combining south of the border to create the perfect recipe for demand," said EDC chief economist Peter Hall.

"This is having a considerable impact on Ontario's exports, and we expect that demand to continue going forward, not just in the auto industry but most sectors of Ontario's economy," Mr. Hall said.

The EDC is a Crown corporation that provides financing to help Canadian companies invest in international business opportunities.