News Releases

REGINA, SASKATCHEWAN--(Marketwire - Oct. 12, 2011) - While Saskatchewan's economy has again been challenged by wet weather and another weak crop year, the province should still post solid 2.8 per cent real GDP growth in 2011 and lead the country in 2012, according to the Provincial Monitor report released today by BMO Capital Markets Economics.

"The resource sector remains strong, and activity should continue at a brisk pace through next year which, combined with a rebound in agriculture, should help drive 2.9 per cent growth in 2012 – the highest in Canada," said Robert Kavcic, Economist, BMO Capital Markets.

Exploration activity in the oil and gas sector is also robust, and Saskatchewan is expecting 4 per cent annualized growth in oil production through fiscal 2013-2014. "Commodity sector investment is supporting the labour market, and the province boasted Canada's lowest unemployment rate at 4.6 per cent in September," noted Mr. Kavcic. "A tight labour market, solid job prospects and relatively low living costs should continue to drive population growth, and combined with a modestly lower tax burden will support consumer spending and the housing market. Indeed, retail sales are up more than 7 per cent year-over-year through July, the fastest pace in the country."

"It's fantastic to see Saskatchewan continue to gain momentum," said Mike Darling, District Vice-President, Saskatchewan, BMO Bank of Montreal. "Strong demand for labour continues to generate net migration back into our province. Together with our robust resource sector, these factors are positioning the province very well for the year ahead and beyond."

Potash production continues to expand, though at a more modest pace than that seen coming out of the recession. "Canadian production was up 22 per cent year-over-year in the first half of 2011, and the sector will continue to support growth in Saskatchewan," said Mr. Kavcic. "BHP Billiton's Jansen mine – which will become the world's biggest – is on track to begin production in 2015, and the company is actively exploring more mine sites. Meantime, K+S Group continues to invest an estimated $2.5 billion to develop its Legacy Project, which is also expected to begin producing in 2015."

The agriculture sector had difficulty amid extremely wet weather, with real crop and animal production falling 19 per cent last year and shaving more that two percentage points from real GDP growth. Unfortunately, flooding has had a negative impact again this year, and production will again be depressed—insurance claims for unseeded acreage rose to a record $329 million.

The Province of Saskatchewan's FY10/11 Public Accounts reported a surplus of $95 million (0.2 per cent of GDP) before any transfers to/from the Growth and Financial Security Fund. This was $56 million higher than estimated in this year's Budget. "Both revenue and expenses were higher, the former more so," stated Mr. Kavcic. "Saskatchewan is one of only two provinces (the other is Newfoundland and Labrador) on track to be in the black this fiscal year, and the only one projected to be there persistently in the future."

The full Provincial Monitor report can be downloaded at bmocm.com/economics.