Solid but slower growth in Saskatchewan

Some forecasters, however, are more bullish. Royal Bank of Canada, which put Saskatchewan in first place in 2011 at 4.5% GDP growth (ahead of Newfoundland and Labrador), is projecting the province to maintain its nation-leading performance for the next two years.

“Saskatchewan will lead the country in economic growth throughout 2013,” RBC states in its December provincial outlook, which pegs the province’s real GDP growth at 4.2% in 2012 and 4.7% in 2013.

Although more cautious than RBC, the Conference Board of Canada also likes Saskatchewan’s prospects this year and next. The Ottawa-based forecaster, which projected Saskatchewan’s real GDP growth at 5.1% in 2011 — tops in Canada — sees growth slowing to 2.8% in 2012, then rebounding to 4% in 2013.

Both forecasts point to Saskatchewan’s strengths in resources (oil, potash and uranium) and agricultural commodities (grains and oilseeds) as the main reason why it’s outperforming the other provinces.

Specifically, they highlight major multibillion-dollar investments being made by potash-mining companies, including existing producers such as Potash Corp. of Saskatchewan Inc. and Mosaic Co., which are investing $12 billion into mine expansion projects.

Furthermore, newcomers such as Germany-based potash miner K+S and Britain/Australia-owned BHP Billiton Ltd., the world’s largest mining company, are pouring more billions into “greenfield” or new potash mines in the province — the first in 40 years.

One estimate has $50 billion being invested by the mining industry over the next 20 years in the province, primarily in potash production. Last year, the province saw an estimated $17 billion in public and private investment — a record.

Saskatchewan also saw the second-highest number of oil wells drilled in the province’s history — 3,528 — and the highest number of horizontal wells, at 1,992, thanks in large measure to the Bakken light oil play in the southeastern corner of the province.

Another record was set in population growth, with 1,063,500 people now living in the province — the highest in its 106-year history. Saskatchewan posted the fastest population growth of any province in the fourth quarter of 2011 and the second-fastest for the year, behind Alberta.

Employment reached a record high of 523,500 for the month of December and the unemployment rate of 5.2% is second-lowest in the country, next to Alberta. Exports were also at record levels, while growth in housing starts, building permits, retail sales and wholesale trade led the nation in 2011.

Saskatchewan’s fiscal situation — as measured by the general revenue fund, which accounts for the expenditures and revenue of executive government — is also relatively strong.

Although it’s only one of two provinces to report a surplus (the other being Newfoundland and Labrador), the Ministry of Finance reduced its pre-transfer GRF fiscal 2011-12 surplus to $25 million in its mid-term report in late November, down from $72 million in the first-quarter fiscal update and $115 million forecast in last year’s spring budget.

Despite higher-than-expected potash prices and production (which boosted revenue by $93 million from the first quarter update), spending was up by $139 million due to higher-than-anticipated education and spring-flooding costs.

However, on a summary financial basis, which includes the results of the province’s Crown corporations, the province is projected to run a $304-million deficit in fiscal 2011-12.

Overall, the outlook for Saskatchewan is positive in 2012, with the province’s resources wealth providing a buffer against global economic uncertainty. IE