2011 Looking Positive For Saskatchewan: Scotia Economics Report
Alex Koustas 2010, Provincial Trends – Regional Economic Outlook, Scotia Bank Group, 17-11-2010, www.scotiacapital.com
Scotia Economics released their Provincial Trends report today, which indicates further good news for Saskatchewan. The province is projected to see real GDP growth at 3.3%, second only to Alberta. The recovery is being led by a resurging potash industry, investment in the resource sector, and continued expansion of the province’s service sector — feeding off strong inmigration. Extensive flooding has significantly reduced crop production in 2010, but a rebound is likely next year.
Here are some highlights:
· Crude oil production in 2010 is on par with last year’s levels. Production is expected to remain steady for the next few years, as improved drilling technology has helped offset natural depletion by extracting more from existing wells. The Bakken oil fields continue to attract significant interest and there is definite growth potential should investment continue to flow at current levels.
· Potash production is on pace to double in volume this year, though it will fall short of 2008 levels. Activity will pick up in 2011, as farmers are forced to replenish stocks after forgoing purchases in 2009, demand ramps up in China, and lucrative crop prices encourage further planting. Long-term plans still have the industry nearly doubling capacity by 2015.
· Principal field crop results show a significant drop in production. Both wheat and canola — the province’s two main crops — experienced decreases of over 25% year over year from 2009, as flooding delayed planting earlier in the year. Sunny condition at the end of the season have improved yields somewhat, and better overall production should be expected in 2011, barring another year of abnormally poor weather.
· The province’s manufacturing sector is one of the few in the country to have slowed in 2010. Fabricated metal shipments have declined 23% year-to-date while machinery and equipment shipments have suffered as well. A slowdown in drilling and completion of several stages of potash mine expansions are likely the cause for the disappointing showing, given the majority of the province’s metal shipments are for domestic consumption.
The Report also identifies some trends to watch for:
· Reversing declines of the early 2000s, Saskatchewan has seen its population steadily climb to a growth rate of 1.6% in 2009. A booming economy has supported an increase in both international and inter-provincial arrivals, a trend that is expected to continue, supporting above-average population growth and retail sales trends in 2011.
· Saskatchewan was one of the few provinces to show employment growth in 2009, with a gain of 1.5%. Labour demand is expected to remain reasonably firm through next year, resulting in an average annual employment gain of 1.3% over the 2009-2011 period. Continued development of the province’s resources will support hiring in the resource, warehousing and transportation sectors, while professional and finance, insurance & real estate services are benefiting from a growing consumer base.
You can read the entire report here: http://www.scotiacapital.com/English/bns_econ/ptrends.pdf