Newfoundland, Labrador to lead provincial economic growth in 2013

It’s no contest: Newfoundland and Labrador is expected to be the leader in economic growth among Canada’s provinces this year, according to the Conference Board of Canada’s Provincial Outlook Spring 2013 report.

Although Newfoundland and Labrador’s real gross domestic product (GDP) fell by 4.8% in 2012, the provincial economy will make all of that up and more in 2013, growing by an estimated 6% this year. Oil production is expected to rise by 12.5% and private sector investment will continue to climb to all-time highs. In 2014, Newfoundland and Labrador is expected to lead all provinces again with growth of 3.4%.

Alberta, Saskatchewan and Manitoba are also expected to grow faster than the national average of 1.8% this year, but the economic risks to these provinces are mounting. Some resource projects have been postponed due to an uncertain outlook for commodity prices, higher development costs and a lack of certainty about new pipeline construction.

“The economic outlooks for provinces in 2013 are very uneven,” said Marie-Christine Bernard, Associate Director, Provincial Outlook. “While the western provinces retain positive outlooks, their economies face heightened risks. Economic prospects in Ontario, Quebec and the Maritimes will be dampened by subdued business investment and fiscal restraint among governments.”

Among the report findings, Newfoundland and Labrador is expected to generate the fastest economic growth among the provinces in both 2013 and 2014; Alberta’s economy continues to be resilient in the face of uncertainty – however if no progress is made on new pipeline approval in the next 12 months, energy investment could be affected and the province’s economy would suffer; and only Nova Scotia, Saskatchewan, and B.C. are expected to have balanced budgets this fiscal year.

Both Alberta and Saskatchewan will enjoy above-average economic growth in 2013. Alberta posted a phenomenal growth rate of 3.9% in 2012, and Saskatchewan’s economy will surge ahead by 3.8% this year. Both oil and potash production in Saskatchewan will expand rapidly; the construction and manufacturing sectors will also advance strongly. All this activity has spurred a hiring spree, which will bring the latter province’s unemployment rate to just over four per cent this year.

After last year’s nation-leading growth, Alberta’s economy is forecast to expand by 3.1% this year. The looming risk for the province’s energy sector is the uncertainty on access to new pipelines from Alberta to the U.S. and global markets. If no progress is made within the next 12 months, resource investments could be severely curtailed and the economy would take a hit.

Manitoba’s economy is expected to expand at a steady annual average of 2.3% over the next two years, despite restraint in public spending. Metal mining and construction will do well, which will bolster employment and consumer spending.

British Columbia’s economy is expected to grow by just 1.6% this year, due to weak job creation, lower business investment and a weakness in the housing resale market. However, the lull will be temporary – real GDP growth is expected to exceed three per cent next year. Forestry and mining will continue their robust growth.

Economic prospects remain muted in Ontario and Quebec, and both are expected to grow by 1.4% in 2013. Business investment in both provinces is expected to decline due to weaker housing and non-residential construction. And both provincial governments continue to pursue austerity programs that aim to restore balanced budgets. On the bright side, with no further sales tax increases planned for this year, household consumption in Quebec should pick up in 2013.

New natural gas production, along with a turnaround in the forestry and manufacturing industries, will help Nova Scotia’s economy pick up to 1.5% growth this year.

New Brunswick’s economy will return to growth in 2013, although at a moderate pace of one per cent. Mining expansions – especially in potash – will bolster growth in 2013 and beyond.

And Prince Edward Island’s economy will advance at a moderate pace over the next two years – an average of 1.4% annually.

For more on the report, click on this link.