APEC paints weak economic forecast for Atlantic Provinces11/2/2012
SAINT JOHN – An independent think-tank has delivered a sobering economic forecast for Atlantic Canada that will see growth restrained due to weak job numbers and limited government spending.
In its annual outlook delivered in Saint John on Thursday, the Atlantic Provinces Economic Council predicts New Brunswick’s employment growth to be once again well below one per cent next year.
New Brunswick will realize employment growth of just 0.2 per cent by the end of 2012.
Employment growth in 2013 has been pegged at 0.4 per cent – the slowest in Atlantic Canada.
“We are still predicting slow, recovering employment in New Brunswick,” said Fred Bergman, senior policy analyst with the Atlantic Provinces Economic Council. “Continued slow employment growth, slow income growth and modest economic growth is the story.”
The think-tank is projecting employment growth of 0.8 per cent in Newfoundland and Prince Edward Island. Nova Scotia leads the pack with growth forecasted at 1.1 per cent.
New Brunswick’s economy will expand by one per cent by year’s end, dogged by weak project investment in the province, according to the think-tank.
Housing starts are projected to fall seven per cent, existing home sales will dip by four per cent, and the province will only make limited consumer spending growth in 2013.
A lull in mega projects in New Brunswick due to reined in capital spending by the provincial government in 2013 will contributed to a 33 per cent slide in construction investment.
Contradicting those numbers is a projection that New Brunswick’s unemployment rate will reach 10.1 per cent by the end of 2012, but fall to 9.7 per cent in 2013.
The province’s economic growth is also forecasted to rise to 1.5 per cent next year, the bulk of that gain due to the reopening of the Point Lepreau Nuclear Generating Station.
“You are going to see a net gain to the New Brunswick economy because of the planned reopening and potentially a net gain to New Brunswick’s bottom line because of that as well,” Bergman said. “We know that there is going to be significant savings for NB Power.
“You are also going to see greater electricity exports when you are producing your own electricity and lower imports of electricity to buy that fuel and purchase power while Lepreau was down and being refurbished.”
Over the last fiscal year, the cost of fuel and purchase power for the province was $157 million higher than it was prior to the beginning of the refurbishment, according to the report.
The 1.5 per cent economic growth figure is middle-of-the-road in Atlantic Canada.
The think-tank is reporting a 1.7 per cent gross domestic product growth in Nova Scotia and 1.4 per cent growth in Prince Edward Island.
Newfoundland and Labrador’s economy is predicted to grow 3.4 per cent next year after shrink 0.4 per cent 2012 due to reduced oil production.
Although PotashCorp’s mine expansion in New Brunswick is slated to be complete by 2013, the Atlantic Provinces Economic Council has ruled out forecasting that economic boost until 2014 when production is expected to increase.
“We are not going to see a lot of gains on the mining side, but in the longer term we will,” Bergman said.
The report does find that the New Brunswick government is making progress in cutting the deficit.
The four provinces will see their combined deficit total $551 million in 2013 – $99 million of which is overspending in New Brunswick.
“New Brunswick is clearly making gains, making improvements, and is expected to be a lower share of the deficit across the region next year,” Bergman said.
That prediction came as the provincial government released its second quarter fiscal update on Thursday which indicated the estimated deficit has grown $173 million in the last six months.
Finance Minister Blaine Higgs said the rise in the deficit was primarily due to lower than expected income tax, corporate tax and Harmonized Sales Tax revenue.
David Chaundy, senior economist with the Atlantic Provinces Economic Council, said that Atlantic Canada will continue to feel the effects of fiscal uncertainty in the United States, the European recession and a slowdown in emerging markets.
“We are still looking at a very fragile economic outlook, growing uncertainty and reduced spending as a result could trigger a sharper slow down this quarter and earlier in 2013,” he said.