GDP in the territories is expected to grow by 3.6% in 2012, and accelerate by 5.4% in 2013, according to a report by the Conference Board of Canada.
September 13, 2012
by PLANT STAFF
OTTAWA—Despite the global economic uncertainty and the unresolved fiscal and economic woes in Europe, economic growth in the Canadian territories is forecast to outpace the country as a whole for several years to come.
GDP in the territories is expected to grow by 3.6% in 2012, and then accelerate by 5.4% and 4.3%, respectively, in 2013 and 2014, according to The Conference Board of Canada’s Territorial Outlook-Summer 2012.
“Commodity prices have declined in recent months, so the short-term economic outlook for the territories is not as robust as what we were projecting at the start of the year,” said Marie-Christine Bernard, Associate Director, Forecasting and Analysis. “Most mineral exploration plans are proceeding this year, albeit at a somewhat weaker pace than expected six months ago.”
In the medium and long-term, the territories’ economic forecast remains positive and the robust economic outlook can be attributed to new metal mine developments. While a mining project is never guaranteed to proceed, favourable global demand for metals suggest that Canada’s mining potential is bright over the next decade—particularly in the North.
On the fiscal side, all three territories are expected to post balanced budgets this fiscal year. But, the economic outlook among the individual territories varies greatly.
Recent setbacks, particularly in the mining sector, will limit Nunavut’s growth prospects in 2012. The report projected real GDP growth of 16% this year, but the new forecast calls for growth of 0.2% in 2012. In Nunavut’s mining sector, the closure of the Hope Bay mine site, lower gold production at the Meadowbank mine, and cutbacks to exploration and development budgets limited the growth outlook for the territory. Construction on the Mary River and Meliadine mines will cause real GDP to surge by 17% in 2013 and 14.2% in 2014. Between 2012 and 2016, the construction industry will grow by an average annual compound rate of 22.7%.
The powerhouse of the Northwest Territories’ economy—diamond mining—is rapidly maturing. Real GDP will increase by five per cent in 2012 before declining the next two years, due primarily to fluctuating production at the Diavik diamond mine. Although the new Gahcho Kué mine is expected to begin production in 2015, its output will not be enough to offset declines when the Diavik and Ekati mines shut down within the next decade.
Real GDP in Yukon will increase by 3.7% in 2012 and the pace of growth is forecast to accelerate in both 2013 and 2014. Over the next decade, several new mines will come into production. Between 2013 and 2020, mining output in Yukon will grow by an average compound rate of 10.7% per year.
The Territorial Outlook, published twice yearly, examines the economic and fiscal outlook for each of the territories, including output by industry, labour market conditions, and the demographic make-up. This forecast is funded through the Conference Board’s Centre for the North.