Like the roughriders, the Canadian Football League team, Saskatchewan’s economy should have been tops in the country for the past two years. As luck would have it, the ’Riders came up short in two consecutive Grey Cup games; and the team’s home province finished in the middle of the pack in gross domestic product growth in 2009 and ’10.

But hope springs eternal in Next Year Country. The ’Riders hope to drink from Earl Grey’s mug this November, and Saskatchewan’s government is predicting the provinces’s economy will lead the nation in 2011. And all the signs are pointing to better than average, possibly nation-leading
economic growth in 2011.

Still, Saskatchewan began each of the past three years expecting to lead the nation, only to be thwarted by a combination of poor crop-growing conditions in 2010 and plunging potash production and prices in 2009. Only in 2008 did Saskatchewan’s economy live up to expectations, led by record-setting prices for potash, oil and agricultural commodities.

Many economists believe the stars are aligning for Sas-kat-che-wan this year. The province’s final news release of 2010 predicts that Saskatchewan’s economy will lead the nation in 2011: “Saskatchewan’s economy is expected to increase by an average of 3.7% next year, well ahead of the 2.4% forecast for the national average.”

Most economists are bullish on the province’s prospects in 2011, with all but one of nine economic forecasters picking Saskatchewan to rank first in 2011.

But these bold predictions are eerily similar to those made by the province in each of the past two years. “Saskatchewan is forecast to start the next decade with the strongest economic growth in the country in 2010,’’ said then-Enterprise Minister Ken Cheveldayoff in December 2009.

But Saskatchewan not only didn’t lead the nation in economic growth in 2010, it lagged the national average.

But there’s every reason for confidence in the future, with Saskatchewan expected to perform well in 2011 after its middling performance of 2010. Last year saw Saskatchewan post record-high population numbers; the province also has the country’s fastest-growing population, the second-lowest unemployment rate, among the fastest-growing wage rates and the second-highest growth in building permits and housing starts in Canada.

But Saskatchewan’s GDP growth was dampened — literally — by excessive rains during the growing and harvesting seasons, reducing both the quantity and the quality of the 2010 crop. Statistics Canada estimates production of the three major crops (wheat, canola and barley) fell by 28% in 2010. And the Conference Board of Canada projects the impact of the flooding on Sas-kat-chewan’s econ-omy will be two percentage points, restricting GDP growth to 1.2%.

By contrast, Royal Bank of Canada pared its overly optimistic forecast for Saskatchewan’s GDP growth in 2010 from 6.3% in September to a still strong 4.5% in December.

Undaunted, RBC now confidently predicts that Saskatchewan will lead the provinces in 2011, with real GDP growth of 5.3%. While RBC economists remain the most confident about Saskatchewan’s prospects in 2011, even the Conference Board of Canada is projecting a robust 4.4% increase in GDP, while Bank of Montreal is predicting an even 4%. Other forecasters, including those with Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank are projecting around 3% GDP growth.

Most economists cite the continued recovery in the potash and oil and gas sectors for Saskatchewan’s rebound in 2011. RBC cites a 150% increase in potash production in the first three quarters of 2010 vs a 66% decline in 2009.

Despite the rejection of Australia-based BHP Billiton Ltd.’s $40-billion hostile takeover of Potash Corp. of Saskatchewan Ltd. by Ottawa in late 2010, resource investment had continued unabated. For example, Europe’s K+S Group recently agreed to purchase Potash One, a Vancouver-based junior with undeveloped assets near Regina for $434 million.

Agriculture also is expected to bounce back from an estimated 17% decline in production in 2010, according to RBC, to a 12% increase in 2011.

On the fiscal side of the ledger, Saskatchewan has recovered from last year’s unanticipated plunge into the red ink, with a projected $137-million surplus in its general revenue fund for fiscal 2010-11, thanks largely to stronger resources revenue. This results in a projected surplus of $68.5 million after the transfer of half the general revenue fund surplus to the growth and financial security fund, the province’s “rainy day” fund.

But on a summary financial basis, which includes Crown corporations, Saskatchewan is projecting a deficit of $325.6 million in fiscal 2010-11 — almost half of the $622.7-million deficit projected in last spring’s budget. IE