News Releases

HALIFAX, January 12, 2011 – After growth of 2.4 per cent in 2010, Nova Scotia will see its economy slow in the coming year, according to the Provincial Monitor report released today by BMO Capital Markets Economics.

“Thanks to fading fiscal stimulus and government restraint, growth is likely to clock in at 2 per cent this year, well below the national rate,” said Robert Kavcic, Economist, BMO Capital Markets.

“Despite softening growth, there's still great news in Nova Scotia with construction activity at Encana's $800 million Deep Panuke natural gas project continuing,” said Laura Charlton, Vice-President, Nova Scotia District, BMO Bank of Montreal. “The first gas is expected to begin flowing late in the year, and we can look forward to bigger exports in the coming years.”

The Province is in deficit-reduction mode, and efforts are now ongoing to return the budget shortfall (about 1 per cent of GDP in fiscal 2011/2012) to balance on a sustained basis. Consumers were already hit with a 2 percentage-point increase in the HST in July 2010, and a stubbornly sluggish job market is not helping—private-sector employment was 1.1 per cent below year-ago levels in December, while the unemployment rate was an elevated 10.4 per cent.

Furthermore, real per-capital government spending is expected to contract through fiscal 2013/2014. Meantime, while manufacturing sales have bounced back smartly from the depths of recession, a strong loonie should keep future growth in check.

The Province of Nova Scotia is now forecasting a $97 million surplus for fiscal 2010/2011, an improvement from the $203 million deficit projected in September. This is the result of higher revenue and lower spending, plus savings from pension valuation adjustment. The province still anticipates a $370 million deficit in fiscal 2011/2012, as projected in the spring budget.

The complete report can be found at www.bmocm.com/economics.

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Media Contacts:

Ronald Monet, Montreal, ronald.monet@bmo.com, (514) 877-1873

Sarah Bensadoun, Montreal, sarah.bensadoun@bmo.com, (514) 877-8224