Nova Scotia\u2019s economic outlook for 2011 can be summed up in an old adage: \u201cSlow but steady.\u201d
\u201cWe\u2019re expecting steady but not spectacular growth over the next year,\u201d says provincial Finance Minister Graham Steele. \u201cAnd steady is good.\u201d
The provincial government and economists are predicting real gross domestic product growth of roughly 1.5% this year. \u201cThat\u2019s about half the national average,\u201d says Paul Ferley, assistant chief economist with Royal Bank of Canada<\/b> in Toronto.
But, Ferley notes, the lower than average GDP growth reflects a better than average economic performance during the recession: \u201cThe province didn\u2019t get as hard hit as much of the country. Therefore, it is not bouncing back from as low a base.\u201d
In fact, says Fred Morley, executive vice president and chief economist with the Greater Halifax Partnership<\/b>: \u201cNova Scotia actually enjoyed some growth during the recession. Now, Nova Scotia is just continuing on.\u201d
The province\u2019s strengths include its information technology and professional services sectors, says Alex Koustas, economist with Bank of Nova Scotia<\/b> in Toronto: \u201cThese [sectors] are growing at a healthy rate above the Canadian average and [they make up] a greater percentage of the economy than in any other province.\u201d
That\u2019s partly due to support from the province, which offers research and development tax breaks and has one of the highest digital media tax credits offered in Canada \u2014 up to 40%.
Like most other provinces, however, Nova Scotia is set to pull back on some of its support. Says Morley: \u201cIt will be the business sector that carries the freight for economic growth in Nova Scotia over the next few years.\u201d
The government has come forward with a four-year plan to balance its budget and is already making inroads, forecasting a surplus of $97.2 million for 2010-11. However, the figure does not include annual expenditures for university funding or student bursaries, which had exceeded $360 million in the previous fiscal year. For the subsequent fiscal year, the province anticipates a \u201csignificant deficit\u201d of $370 million.
In addition to less stimulus spending, royalty payments from the Sable offshore energy project, one of the largest known natural gas deposits in North America, are expected to decline. The $3-billion project involves the development of six major offshore fields.
In Sable\u2019s wake comes natural gas from Deep Panuke, which will be processed offshore and transported via a undersea pipeline. Production was set to begin later this year, but development has wound down, notes Ferley, and only modest gains in the price of natural gas are forecast.
Other capital projects are being fleshed out, including $560 million in capital spending planned by the province.
Fingers are also crossed that two major projects will proceed: the Donkin coal mine and the Lower Churchill power venture. The former would explore whether the lifeblood of Cape Breton will flow once more; the latter is a $6.2-billion hydroelectric project involving both Nova Scotia and Newfoundland and Labrador.
In the meantime, the Nova Scotia government is moving ahead to help businesses become more productive. It\u2019s an area that needs work, says Koustas, pointing out that the national average for productivity in Canada is 1.6 units produced per worker. In Nova Scotia, that figure is 1.3.
The province has launched a productivity investment program to help companies improve their employees\u2019 skills and to purchase advanced equipment in an effort to become more competitive.
The new program, which comes with an annual budget of $25 million, is part of \u201cjobs-Here,\u201d a government plan to create employment opportunities.
The plan gets a thumbs-up from Morley: \u201cIt hit a lot of the right buttons, with a focus on improving productivity and making investments in people. This is long overdue in Nova Scotia.\u201d
Morley also sees opportunities in the network of universities that dot the province: \u201cThose are tremendous resources that we haven\u2019t tapped into fully.\u201d
Ferley cautions the government not to overreact to slower growth. \u201cKeep taxes low,\u201d he advises. \u201cThere is a temptation to look to the tax side to deal with fiscal challenges.\u201d
So far, the government is both resisting and giving in to that temptation. Last summer, it increased its portion of the harmonized sales tax by two percentage points, to 15% \u2014 the highest in the country.
But, as 2010 was coming to a close, the province announced a 10% reduction in Nova Scotia\u2019s small-business corporate income tax rate.\tIE<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Thanks to a little help from the province, Nova Scotia\u2019s IT and professional services sectors are growing at a healthy rate<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3130],"tags":[2345,3197],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316758"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=316758"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316758\/revisions"}],"predecessor-version":[{"id":362047,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316758\/revisions\/362047"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=316758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=316758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=316758"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=316758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}