Saskatchewan is seeing some improvement due to the end of a recession, but economic prospects may be dim for a while longer in some parts of the province.
Saskatchewan's economy contracted again this year, but conditions are forecast to improve gradually going forward, said a release from The Conference Board of Canada. After declining by 1.5 per cent this year, overall economic growth will be resuming next year, with GDP rising by 1.2 per cent, according to The Conference Board of Canada's Provincial Outlook for Autumn 2016.
"The economic outlook for Saskatchewan is improving but the road to recovery won't be easy. The downturn in commodity markets appears to have reached bottom but no swift pick-up in prices or development of new major projects is expected over the near term," said Marie-Christine Bernard, associate director of the provincial forecast for The Conference Board of Canada.
Over 2017 and 2018, Saskatchewan's economy will not be in recession, but economic growth will remain weak at an average of 1.2 per cent. Conditions will be difficult in most sectors, but the resource sector will experience a slow turnaround and the economy will expand.
The completion of a number of large-scale mining projects will create a gap in mining investment in the province, said the report. Investment spending as a whole dried up due to the fall in oil prices so capital outlays are expected to remain sluggish until the end of the decade. Total mining production in Saskatchewan will remain stagnant this year and next, but potash production is expected to be a contributor to the economy over the near term as new production at K+S Legacy mine comes online and activities at the idled Mosaic Colonsay mine may come back. The potash industry is still uncertain as global inventories remain elevated and new potash mining investment will likely remain weak.
Another bright spot for the province is a recovery in the agriculture sector. Though weather hampered this year's harvest, Saskatchewan's agriculture sector is expected to post a positive performance over the near term. Risks for the sector come with the possible renewed trade restrictions from country-of-origin labeling (COOL).
As the economy begins to stabilize, a pick-up in the service sector should create a few jobs and improve domestic demand conditions over the next few years. Saskatchewan workers can expect gains in employment in 2017, but wage gains will be marginal, reflecting the considerable slack in labour markets. Household consumption is expected to increase modestly over the forecast period and consumer spending on services will reap most of the benefits from the small gains that do occur, the report said. Financial and commercial services are planned to rebound in 2017.
Those who wish to see the full report may access it on the Conference Board’s e-Library.
