Bullish on NB
The Conference Board of Canada is bullish on the New Brunswick economy, predicting the province will lead the Canadian pack in economic growth this year.
The Ottawa-based think-tank released its provincial forecasts Thursday, noting it expects only the Maritime provinces and Manitoba to show positive growth in their economies this year.
And it feels New Brunswick will lead the nation with a modest 0.9-per-cent increase in gross domestic product, outpacing the rest of the country.
The provincial government’s infusion of stimulus money into the economy and the introduction of personal and corporate tax breaks have combined to offset a generally weak economy, said Marie-Christine Bernard, the conference board’s associate director, provincial economic trends.
“It depends on the business cycle,” Bernard said. “This cycle had more of an effect on provinces such as Alberta and B.C. that were booming in the last few years because of commodity prices. That didn’t affect New Brunswick as much – New Brunswick isn’t going through the boom-bust cycle.”
Bernard said that, while resource sectors such as forestry, fisheries and mining continue to struggle, the province’s decision to inject $1.2 billion into infrastructure projects and make $400 million in tax cuts over the next two years will more than make up for any weakness in the economy.
“There’s some public stimulus money, some infrastructure funding and some tax cuts,” she said of the public money.
“That seems to be helping the province – that’s one of the main factors.”
The conference board is also forecasting the province’s GDP to grow by 2.8 per cent next year as Canada begins to emerge from the recession.
“The recovery won’t be as pronounced as Ontario, Alberta and B.C., but generally things seem to be going quite well in New Brunswick and the other Maritime provinces,” Bernard said. “We’ve seen some job losses, but nothing compared to the national average. Consumer spending has also come down a little bit, but nothing like we’ve seen in Alberta and B.C.”
Bernard said last week’s announcement by Irving Oil Ltd. and BP PLC that they will not proceed with the proposed Eider Rock refinery in Saint John won’t have an immediate impact on projections, since construction wasn’t slated to begin for a couple of years. She said there would likely have been some preliminary work that could have sparked the recovery even further, though.
“Construction wasn’t supposed to start until 2011 or 2012, but typically, before a large project like that there’s some pre-construction spending,” she said.
“Engineering and architecture work … that could have added some stimulus to 2010.”
Bernard said the resource sectors will continue to be battered this year.
“They are going to suffer another decline in 2009. Forestry hasn’t been doing well for a number of years and the fishery could be facing one its worst years in recent memory.”
Nationally, the conference board is expecting growth during the remainder of this year and for the next couple of years.
It is predicting a mild turnaround in the economy in the second half of 2009 that will gradually pick up speed in 2010 increase further in 2011.
Economies in Manitoba and Prince Edward Island are both projected to grow by 0.8 per cent, while Nova Scotia is the only other province expected to come in on the positive side of the ledger at 0.3 per cent.
Newfoundland and Labrador, and Ontario, remain under siege, with the Newfoundland economy slated to take a 3.4 per cent hit, while Ontario’s economy is expected to shrink by three per cent this year.
The Western provinces are also expected to be hard hit, with Saskatchewan and Alberta dropping 2.7 per cent and British Columbia suffering a 2.5 per cent contraction.
The Western provinces’ economies are also forecast to shrink, with the Conference Board projecting a 2.7 per cent drop in Saskatchewan, a 2.7 per cent drop in Alberta and 2.5 per cent drop in British Columbia.
Published Friday July 31st, 2009 by Dave MacLean