OTTAWA, June 13, 2016 /CNW/ – Saskatchewan will manage to crawl out of recession this year but its economy remains weak as only 0.2 per cent in real GDP growth is expected, according to The Conference Board of Canada’s spring Provincial Outlook.
“Saskatchewan’s economy will narrowly avoid recession this year. The province’s mining sector continues to suffer from lower oil, uranium, and potash prices, while the job market has been shedding jobs and consumers are reluctant to open their wallets,” said Marie-Christine Bernard, Associate Director, Provincial Forecast, The Conference Board of Canada. “A modest pickup in economic growth is in sight for next year as conditions in the energy sector stabilize.”
- Saskatchewan’s economy is expected to struggle out of last year’s recession but it remains weak with real GDP forecast to grow just 0.2 per cent in 2016.
- Only four provinces are expected to see real GDP growth above 2 per cent this year: British Columbia, Ontario, Manitoba, and Prince Edward Island.
- The commodity price slump will continue to hurt the economies of Newfoundland and Labrador, Saskatchewan, and Alberta. The wildfires in northern Alberta will have a short-term economic impact but rebuilding efforts will lift real GDP in 2017.
Saskatchewan’s mining industry is in for another tough year. The lion’s share of mining in Saskatchewan—oil and gas extraction—will continue its slide this year. Crude oil prices will gradually recover over the next few years, but not to pre-2015 levels. While prices remain low, Saskatchewan’s oil reserves are more difficult to exploit and explore. The sector will lose an average of 1.2 per cent this year and next.
Meanwhile, potash prices have not picked up and the market is still believed to be oversupplied. However, potash volumes are forecast to increase later this year as K+S brings new production online at its Legacy Mine. Although uranium mining will be a bright spot, slow demand has led to the closure of Cameco’s Rabbit Lake Mine ahead of schedule, leaving approximately 500 workers without a job.
Agriculture is also expected to post a positive performance over the near term. Seeding is off to a good start, indicating a decent year for farmers. However, low soil-moisture levels provide some cause for concerns.
Both the manufacturing and construction sectors will fare poorly. And the weaknesses in the province’s economy will spill into the services sector, where growth will be dragged down by losses in the financial, retail, and personal services sectors.
Overall, more than 5,000 jobs will be lost this year. Inflation will outpace wage gains, reducing the buying power of the province’s residents and resulting in consumers delaying purchases of durable goods.
A modest recovery of 1.1 per cent in real GDP growth is expected in 2017, as production at new mines ramps up and the services sector activity improves.