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REGINA, June 25, 2009 – The Saskatchewan economy has been a pillar of relative strength during this recession, thanks to a diverse commodity mix, capital investment and resurgent population growth, according to the BMO Capital Markets Economics Provincial Outlook report.
“Real GDP will likely expand 0.4 per cent this year, the only province in Canada to see growth,” said Robert Kavcic, Economist, BMO Capital Markets. “This will be followed by a 1.9 per cent expansion in 2010.”
While other Western provinces have been hard hit by last year's commodity price decline, Saskatchewan's diverse mix – including oil, uranium, potash and other agricultural products – has helped it weather the downturn. Still, potash output was down a hefty 55 per cent in the first quarter amid slowing global demand and a bid by major producers to support prices. Meantime, the province's energy sector enjoyed a boost in the past two years thanks to a relative cost advantage over Alberta (where royalties were increased and labour markets were exceptionally tight), but that advantage is poised to shrink as costs in Alberta come down.
“For the past two years, Saskatchewan's hottest commodity has been people, with the province netting more than 13,000 interprovincial migrants since the start of 2007, and population growth rising above 2 per cent year-over-year for the first time since the 1970s,” according to Kavcic. “This has helped domestic demand and housing markets outperform, despite recent softening. Still, Saskatchewan is the only province yet to see job losses this recession—employment stood at a record level in May.”
The Province of Saskatchewan is projecting its 16th consecutive year of black ink. The fiscal 2009/10 surplus is pegged at $425 million with only a modest $9 million net transfer from the Growth and Financial Security Fund. The Province has announced $1.5 billion in infrastructure spending this fiscal year, which at about 3 per cent of GDP will help support the recovery.
The complete report can be found at www.bmocm.com/economics.
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