AS YOGI BERRA FAMOUSLY said, making predictions is tough – especially about the future. It’s especially tough when you are predicting something as volatile as Saskatchewan’s economy, which is subject to the vagaries of commodities markets, the global economy and the weather.
With those caveats in mind, the consensus of seven private-sector economists is that Saskatchewan will post 2.9% real gross domestic product (GDP) growth in 2013, down slightly from 3.1% in 2012. That’s still good for second place among the provinces.
Some forecasts, such as that from the Conference Board of Canada, are more bullish. The Ottawa-based economic forecasting agency is projecting that Saskatchewan will post 3.4% GDP growth in 2013 – tops in the country. The Conference Board attributes this mainly to the ongoing expansion of the potash industry.
Economists with Royal Bank of Canada (RBC) also are fans of Saskatchewan’s resources-based economy but are concerned about the downturn in the potash industry in fourth quarter of 2012. In RBC’s December provincial economic outlook, assistant chief economist Paul Ferley scaled back his forecast for 2013 to 3.5%: “This represents a downward revision from the 4% that we projected last quarter and reflects some of the potash production cutbacks continuing into early 2013.”
Saskatoon-based Potash Corp. of Saskatchewan Inc. had shutdowns at three of its mines that extended into early 2013 because of delayed contract agreements with major customers – namely, China and India.
Australia-based BHP Billiton Ltd. delayed a development decision on its Jansen potash project but continues preparatory work at that site, east of Saskatoon, which could become the largest potash mine in the world.
And Brazil-based Vale SA announced in August that it was postponing a 2.9-million-tonne-per-year solution potash mine near Kronau, southeast of Regina. However, in December, Vale indicated that it wants to sell the $3-billion project.
@page_break@ Germany-based K+S’s $3.25-billion Legacy Project, a potash mine under construction near Regina, still aims to start production at the end of 2015, making it the first new potash mine in Saskatchewan in more than 40 years.
Furthermore, both Potash Corp. and Plymouth, Minn.-based Mosaic Co. are in the midst of $6-billion expansions of their respective potash mining operations in Saskatchewan.
Other economists are a little more cautious than those with RBC or the Conference Board. Those with Toronto-Dominion Bank are ratcheting down their forecast for Saskatchewan’s GDP growth to 2.4% in 2013 from 3.1% in 2012 – because of the slowdown in the potash industry.
According to TD’s forecast: “Looking ahead, the slower pace of capital investment in the resource sector is expected to be short-lived, as the global economic environment picks up and commodity prices increase.”
Economists with Bank of Nova Scotia also are forecasting a slight decline in Saskatchewan’s GDP growth to 2.6% in 2013 from 3.1% in 2012. This, says Scotiabank’s report, is still “among the fastest-growing provinces. Growth is driven by robust consumer spending, business investment – particularly in the resources sector – and exports.”
In fact, Saskatchewan ranked among the top-performing provinces in 2012 in four key economic indicators: housing starts (highest percentage increase in the first 11 months, compared with 2011); retail sales (second-highest percentage increase); exports (second-highest); and manufacturing sales (second-highest).
As a result, unemployment remains low, with the December 2012 jobless rate of 4.6% being the second-lowest in the country. And job growth in Saskatchewan remains high, as the employment growth rate of 3.1% in December was third-highest among the provinces.
Saskatchewan’s population is growing, up by 2.2% in the third quarter of 2012, vs the corresponding period in the year prior. This was the best year-over-year growth for the province since 1921.
International exports – primarily oil and gas (36%); potash (22%); oilseeds, wheat and other agricultural commodities (33%); along with uranium – totalled $26.5 billion in the first 10 months of 2012, a 10.3% increase over the same period in 2011.
The RBC report forecasts that retail sales, which increased by an estimated 7% in 2012, are expected to remain strong at 6% growth in 2013, while housing starts, which jumped by 40% (highest among the provinces) to 9,900 in 2012, will slow to a more sustainable 7,900 this year.
Fiscally speaking, Saskatchewan boasts the only balanced budget in the country.
Population: 1,086,564
GDP 2011 ($bil.): 57.5
GDP % change: +4.9
2012-13 surplus ($mil.): 12.4
Estimated net Debt ($bil.): 0
Median after-tax income,
all families: $50,200
household disposable income/capita: $31,223
Figures are from latest available reports/estimates
Sources: Statistics Canada; Government reports
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