Low prices hold back GDP growth of Canada's north
Weak commodity prices over the past year have taken their toll on one of the most significant mining centres in the world.
Canada's northern territories – which had previously enjoyed robust economic growth – are expected to show sluggish GDP gains this year, according to a report by the Conference Board of Canada – an independent think-tank.
Real gross domestic in the territories is forecasted to rise by just half a percentage point in 2013, as reported in a news release on the Territorial Outlook biannual report.
"A once-thriving mining sector is now re-evaluating development and exploration plans due to lower commodity prices and tight capital markets, which makes it difficult for mining companies to obtain financing," said Glen Hodgson, senior vice-president and chief economist of the research organization. "However, the outlook beyond this year is more promising. Economic growth in the territories over the next few years is expected to easily outpace growth in most other Canadian regions."
With mining companies cutting costs all around – especially in exploration – the territories have seen production and job losses in 2013. Exploration spending cuts have hit Nunavut particularly hard.
Meanwhile, "the Northwest Territories will have the weakest regional economy in Canada this year – no real GDP growth is forecast," the report summary reads.
But the economists are optimistic about future growth.
Real GDP in the territories as a whole is expected to expand by 3.2% in the next year and 4.2% in 2015.
The "subpar economic conditions" will be "short-lived," according to the researchers, as several new mines go into production and global demand for metals rises.
In September 2012, the think-tank was already warning about slowed growth – saying that mineral-exploration was proceeding at a weaker than expected pace. But at that time, the organization still predicted 2013 GDP growth of 5.4%.
Creative Commons image by: US Embassy Canada