August 20, 2012

West expected to outperform the nation

RICHARD GILBERT

staff writer

Western Canada will lead the country in economic growth in 2012 and 2013 driven by investment in the resource sector.

“For the most part the outlook for the provinces remains positive, despite the bumpy ride in the short term,” said Marie Christine Bernard, associate director, Provincial Outlook with the Conference Board of Canada.

“Interest in developing natural resources across Canada will provide a solid foundation for job creation and income prospects in the years to come, so that stronger economic growth can be expected next year and in 2014.”

A recent report by the board predicts that Alberta, B.C., Saskatchewan and Manitoba will all expand at the same rate or faster than the Canadian economy as a whole, which is forecast to post real growth in gross domestic product (GDP) of 2.4 per cent in 2013.

This year, the Western provinces are also forecast to grow faster than the Canadian economy, which is expected to expand by 2.1 per cent.

The report said the recent softening in many commodity prices will impact profits in the resource sector, but it is unlikely to halt current investment plans.

“Prices for most metals and minerals remain elevated and will continue to drive exploration activity and new mine construction,” said the report.

“Moreover, the heavy development that occurred in the resource sector, especially in Alberta’s oilsands, is finally paying off in terms of increased productive capacity.”

The Alberta economy is expected to grow by 3.8 per cent in 2012, which makes Alberta the fastest expanding province in Canada.

However, weak natural gas prices and volatile crude oil prices are leading to uncertainty about future capital spending plans in the energy sector.

Public capital expenditures in Alberta will decline over the next few years because after they were boosted during the recession. Real GDP is expected to grow by 3.0 per cent in 2013.

The Saskatchewan economy is expected to grow by 2.4 in 2012 and 3.4 per cent in 2013, with very high levels of investment, especially non-residential, non-energy-related business investment.

Mining projects make up the majority of new investment, which includes expansions at existing potash mines, ongoing construction at the Cigar Lake uranium mine and the recently started $3.25 billion Legacy Project, as well as BHP Billiton's proposed Jansen potash mine.

These high levels of non-residential business investment will propel the construction sector to 3.8 per cent growth in 2013 and 6.8 per cent in 2014 and create an estimated 7,000 jobs over the period.

B.C. is expected to have real GDP growth of 2.3 per cent in 2012 and 2.8 per cent in 2013. Growth in the mining sector will increase due to increasing unconventional natural gas production, which will help offset more moderate export demand for the manufacturing and forestry sectors.

In Manitoba, stronger growth in the agriculture, mining, manufacturing and construction industries will contribute to a gain of 2.9 per cent in 2012 and 2.4 per cent in 2013. Furthermore, Manitoba’s average unemployment rate will edge down from 5.4 per cent in 2011 to 5.2 per cent in 2013.

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