Outlook improving

But despite sunnier skies on the horizon, improvements in gross domestic product (GDP)will be muted in 2013. In fact, according to Robert Kavcic, senior economist with BMO Capital Markets Corp. in Toronto: “Near-term growth remains lacklustre. Real GDP likely expanded 1.5% in 2012 and should pick up to 1.9 this year.”

The promise of smooth sailing ahead is linked to major projects currently on the books. Foremost among these is the $25-billion federal contract won by Irving Shipbuilding Inc. to build the Canadian Navy’s next fleet of combat ships. The Conference Board of Canada predicts that this contract will add more than 8,000 people to Nova Scotia’s employment rolls and bump provincial GDP by more than $700 million annually. The impact of this 30-year deal, however, will not be felt significantly in 2013.

Other major projects expected to have significant impact over the long term have faced obstacles recently. These include Encana Corp.’s Deep Panuke natural gas project, which now is not expected to begin producing until later this year, and unanticipated delays in production for the Sable Energy Offshore Project. “That said,” Kavcic says, “output in late 2013 and into 2014 should be supportive of growth.”

While the province awaits these economic rewards, it has been moving toward improving its own books. “Governments have focused on improving their fiscal situation,” says Warren Jestin, senior vice president and chief economist with Bank of Nova Scotia in Toronto. “The government has been persistent in this regard, and it tends to mitigate risk.”

The province has revised its deficit forecast to $277 million (0.7% of GDP) for this fiscal year from $211 million. Total revenue has been reduced by $90 million to $9.2 billion, reflecting lower personal income tax receipts, with personal income expected to be about $500 million below the budget forecast. (However, total spending is running about $26 million below the forecast.) Despite missing these targets, says Kavcic, “there’s no indication the province will not balance the budget next fiscal year as planned.”

Other bright spots include a more robust economy south of the border, which will provide support, particularly to Nova Scotia’s largest commodity export, rubber tires. Continued strength in crab and lobster demand is expected to keep the province’s fish exports afloat, despite lower prices.

Major infrastructure projects also should help. “Beyond 2014,” says Cooper, “the development of the Maritime Transmission Link and the cutting of steel for the Arctic Offshore Patrol ships further bolster the prospects for accelerating growth.”

But despite the rosier outlook, there are significant challenges. The population is not growing – and it is aging. “This is a greater challenge for Atlantic Canada than other parts of the country,” Jestin says. “On a go-forward basis, skills shortages and shortages among young people will be significant issues.”

Says Cooper: “Optimism remains on the agenda for Nova Scotia.”

 

Population: 948,695

GDP 2011 ($bil.): 35.4

GDP % change: +0.5

2012-13 deficit ($mil.): 277.0

Estimated net debt ($bil.): 13.7

Median after-tax income, all families: $43,800

household disposable income/capita: $26,256

Figures are from latest available reports/estimates

Sources: conference board; Government of nova scotia

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