Newfoundland and Labrador to face mild recession in 2016
Highlights
OTTAWA, Dec. 7, 2015 /CNW/ – The forecast for Atlantic Canada is mixed in 2016. Newfoundland and Labrador’s economy is set to contract again, Prince Edward Island and New Brunswick are expected to see modest growth, while the outlook in Nova Scotia is more favourable, according to The Conference Board of Canada’s latest Provincial Outlook.
“There is a wide divergence among the Atlantic provinces’ economic performances next year,” said Marie-Christine Bernard, Associate Director, Provincial Forecast. “The slump in oil prices pulled Newfoundland and Labrador into recession this year and the outlook remains weak for the next two years. Meanwhile, Nova Scotia’s economy is benefiting from offshore exploration activities and work is getting underway at the Halifax shipyard on the combat ships for the Canadian navy.”
Shipbuilding Contract Will Support Healthy Gains in Nova Scotia
Nova Scotia’s economy is expected post healthy gains over the next two years. After an estimated 1.8 per cent gain in 2015, real GDP is forecast to expand 2.3 per cent in 2016 and 1.7 per cent in 2017. With work now underway on Arctic patrol vessels at Irving’s newly expanded shipyard, the province’s manufacturing sector is forecast to see robust gains in the next two years. As the economy picks up, employers will add to their payrolls. More than 8,000 new jobs are expected to be created in Nova Scotia over the next two years. Construction will be another bright spot in the provincial economy, with both residential and non-residential investment forecast to see double digit growth in 2016. However, as work is completed on several large-scale projects, construction activity will slow down in 2017.
New Brunswick’s Economy is Picking Up Speed
Economic growth in New Brunswick will be modest in 2015-16, before picking up speed in 2017.The province’s mining industry will do well over the next two years as both metal and non-metallic mining are expected to ramp up production. Strong U.S. homebuilding activity will help support demand for New Brunswick’s wood products and drive up prices, which will allow some currently idle mills to restart operations. In all, New Brunswick’s real GDP is poised to advance by 1.7 per cent in 2015 and 1.6 per cent in 2016 before picking up speed in 2017.
A Small Step Back for Prince Edward Island
Prince Edward Island’s economy will buck the national trend and see a slowdown in growth in 2016, with real GDP up just 1.6 per cent. The slowdown is mostly due to spending constraints imposed by the provincial government as it attempts to reach its goal of balancing its budget by 2016–17. The news is not all negative though. A strengthening manufacturing sector and a sound performance in the primary and other industrial sectors will stimulate the economy. And government spending should pick up the following year, leading the province to stronger growth in 2017.
A Sobering Economic Outlook for Newfoundland and Labrador
The economic outlook for Newfoundland and Labrador over the next two years is subdued, as major projects have passed their peak investment levels and the matured offshore oil fields continue to produce less oil. In addition, the province is facing the challenge of low prices for both oil and metals, which will have a negative impact on near-term investment and production decisions. Overall, real GDP growth will remain flat over the next two years, contracting by 0.8 per cent in 2016 and expanding by 0.2 per cent in 2017.
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