Alberta, oil sands lead the Canadian economy once again
Canada's oil-rich Alberta has come out of the global recession virtually unscathed, and the winning streak isn't over. Fuelled by the oil sands industry, Alberta will again be Canada's fastest growing economy in 2014.
Over the past few years, Canada has seen a two-tiered economy in which resource-rich provinces consistently outperformed the rest of the country. For three consecutive years, Alberta has been the largest contributor to economic expansion in Canada, with the energy sector fuelling virtually all the growth. In 2013 Alberta's GDP is projected to rise by 3.2% and slightly more over the following year.
According to the latest Provincial Outlook report from the Conference Board of Canada, Alberta's economy has "remained resilient" despite $1.7 billion in damages from flooding this past summer. The Board cautions that pipeline constraints remain a risk, as more bitumen will need to make its way to markets. Over the near term, however, existing capacity should do.
Meanwhile, Newfoundland and Labrador has experienced its own oil boom, with GDP expected to expand by 6% due to a rebound in oil production after shut-downs in 2012. Although this growth will be tempered over the next year, the Conference Board predicts a bright future for Canada's easternmost province, with new iron ore mines and multi-billion-dollar energy projects.
Saskatchewan, which saw 4% GDP growth this year, won't see a repeat of that success next year. The Conference Board says growth will cool, partly due to turbulence in the potash market. Weak potash prices and production will curb GDP gains, bringing them more in line with the national average. The breakup of the Belarus and Russian potash cartel which sent prices tumbling could affect the Saskatchewan economy by as much as 0.5%, Jacqueline Palladini, senior economist at the Conference Board of Canada, told MINING.com. Although the mining industry will contribute less to the economy in the near-term, a strong construction sector will keep the economy moving. The Board also notes that in the medium and long-terms, prospects for the mining industry are "excellent."
But the rest of Canada is finally catching up. The Board forecasts "better days ahead" for most provinces. Although Alberta will hold on to its position as Canada's fastest growing economy this year, the prospect of a stronger US economy will help boost exports and improve the outlook for the rest of Canada as well.
In fact, as of 2015, British Columbia is expected to top the charts with 3.1% GDP growth.
"Real GDP had been stuck in low gear, but given the positive outlook for key foreign markets, the province should see a turnaround," the Board writes.
Mining and natural gas activities should also boost the economies of Manitoba, New Brunswick and Nova Scotia. Metal mining in Manitoba is set expected to jump by 19.7% in 2015 as projects such as the Reed copper mine ramp up production.