Get ready

Everton McLean
Send to a friend

Send this article to a friend.

The recession is coming

Make no mistake, we'll be hit by the global recession in this province. But Newfoundland and Labrador could be situated better than most other provinces to withstand and recover from the downturn.

That was the message from experts speaking on the tumultuous economy at the St. John's Board of Trade Business Development Summit Thursday.

Finance Minister Jerome Kennedy Photo by Everton McLean/The Telegram

Make no mistake, we'll be hit by the global recession in this province. But Newfoundland and Labrador could be situated better than most other provinces to withstand and recover from the downturn.

That was the message from experts speaking on the tumultuous economy at the St. John's Board of Trade Business Development Summit Thursday.

Provincial Finance Minister Jerome Kennedy told the conference that after a projected $1.27-billion surplus this past year, 2009 will most likely be a deficit year.

He said that will be the case even if oil prices rebound to $60 a barrel from current prices of about $44 per barrel.

Kennedy said he doesn't expect to get much from Ottawa in the stimulus package expected next week with the federal budget.

"There's been very little indication given as to what they're going to do. There's been all this talk about stimulus, but we have no indication as to where and how stimulus money could be spent," Kennedy said, although he did plug a new federal penitentiary as a good idea for a stimulus project in this province.

While Kennedy prepared the people at the conference for lean times, economists gave a fairly favourable picture of what the province can expect.

Paul Ferley, assistant chief economist with the Royal Bank of Canada, said that while the national economy will falter in 2009, it will be somewhat protected from the bigger recession in the U.S.

He said the cost of getting capital in Canada has not increased as much, and a prolonged collapse in commodity prices - which largely drive the economy across the nation as well as in Newfoundland and Labrador - is not expected.

He expects the Canadian economy will not grow in 2009, but see a 2.7 per cent increase in 2010.

The Canadian dollar is predicted to average around $0.80 against the U.S. dollar in 2009 and $0.87 in 2010.

Meanwhile, Gregory Klump, the chief economist for the Canadian Real Estate Association, said this province's housing industry remains healthy.

Klump said he forecast the national average house price to drop by eiht per cent in 2009, and rebound by 1.1 per cent in 2010, with the biggest price declines in British Columbia and Alberta.

But he said Newfoundland is expected to see price increases of 4.8 per cent, followed by another small jump in 2010.

He said good supply and demand ratios are helping keep prices solid.

St. John's Mayor Dennis O'Keefe was on hand to highlight what he called a solid economic year in the city.

"When you look at the housing starts in the metro area, you see we're up about 26 per cent ( in 2008)," he said.

He said the population is growing, up to about 101,000, a fair growth rate for a few years ago. Tourism, he said, continues to pump millions into the city.

A panel of local business people discussed some of the issues facing the province.

Panel member Charlie Stacey, publisher of The Telegram, said from a provincial perspective, things still look optimistic. When it comes to stimulus and infrastructure spending, however, he'd like to see money spent during the recession go into useful infrastructure, particularly things like schools and hospitals.

"Any money that is spent I'd like to see used to get good assets that will help us along the way," he said.

John Steele, president of Steele Communications, said one of the challenges facing the province is getting capital.

He said his company recently had to stall a deal to buy several Ontario radio stations because the cost of getting money from the banks had become too high.

Panelist Bill Mahoney, president of the Murray Premises, agreed it's hard to gain access to capital. However, he said some opportunities could arise from the downturn for businesses and investors in the local economy.

Organizations: St. John's Board of Trade Business Development Summit, Royal Bank of Canada, Canadian Real Estate Association The Telegram Steele Communications

Geographic location: Newfoundland and Labrador, U.S., Canada British Columbia Alberta St. John's Ontario

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • steve
    July 02, 2010 - 13:34

    Mr Kennedy...aka Germoan... believes Newfoundland and Labrador shouldn't expect much from the Federal Gov.....go on.... really...oh, I don't know...it's as easy as ABC. This must be the second part of the great Danny's plan. Use our own money to get things going. Brillant. Just Brilliant. Well at lest we still have our pride to wrap ourselves in. I hope it's keeps us fed and warm.

  • Graham
    July 02, 2010 - 13:26

    Have to give Jerome some credit here people. HE READ HIS LITTLE SPEECH JUST THE WAY DANNY WROTE IT FOR HIM. What an absolute joke Williams and his clone Kennedy have made of our Province and our Government.

  • Ken
    July 02, 2010 - 13:25

    So Minister Kennedy doesn't expect much out of Ottawa. Wonder why ? Steve and Graham have hit the nail on the head. Chickens coming home to roost. Reap what you sow... Any of this ring a bell Jerome.

  • Truth
    July 02, 2010 - 13:24

    Right on Steve, Yup and Graham. Danny is running things his way which is why, and I quote:

    ...This province has been bucking the trend in consumer confidence. In fact, a researcher says consumer confidence in Newfoundland and Labrador is possibly the highest in the western world. Corporate Research Associates CEO Don Mills says it will take a lot to shake that. Mills says this province leads the country in consumer confidence and continues to enjoy a high level of satisfaction with government.

    Thanks again for reminding everyone who we have to thank for our relatively good position compared to the rest of Canada.

  • JOHN
    July 02, 2010 - 13:24

    Did you know that even in the middle of a recession, large corp's are lobbying to keep immigration WIDE OPEN all for the purpose of keeping wages low? Find out more at fairus.org. It's funny how politicians and union leaders pretend not to understand that increasing the labour supply exponentially will make it harder for Canadians to find work and drive down wages. Maybe your elected officials need to hear from you at parl.gc.ca

  • Guess What
    July 02, 2010 - 13:16

    Guess what folks, we deserve the government that we get. Williams approval rating has recently been just shy of that which Saddam Hussein enjoyed in his heydays, and we all know how Saddam ran things don't we.

    Williams brought home the big windfall claiming we did it...we did it as he was paraded through the St. John's air terminal. Yep, he did it allright, blowing the whole wad on the teachers pension fund...which has gone up in smoke with the market meltdown.

    Then we had the ABC campaign, and we have as yet to see the negative fallout from that silliness.

    We in this province consistently elect messiah's, and where has it gotten us....really?

  • Yup
    July 02, 2010 - 13:15

    Gee Jerome, guess people were not able to understand why they have lost jobs, can not find jobs, needing to leave Fort McMurray and return home due to loss of jobs in Alberta all by themselves. Takes Dannys mouth from the south to inform the poor masses that he and Danny are the only ones that can see the future or what has been written on the walls for months.

    Guess you forgot to bring the quarterly statements from the big four oilsands outfits. See where Suncor is going? How many people from this province were working on the expansion, and have since returned to the province? Might be where your population increase has come from now does'nt it?

    And while we are on it, whats with this magic number of 1.6 Billion that you and Danny seem to find then blow, then try to get outta Exxon? Three times in the past few months this government has brought this number up. Surplus, Pensions and now the Offshore. I have a funny feeling either it never was, you spent it or you are dreaming about it. What is/was/will it be?

  • AnnD
    July 02, 2010 - 13:15

    4 new seniors bldgs, new Insurance bldg, 3 or 4 new hotels, Pleasantville development, new housing development- looks like St. Johns' will do OK

  • Willi
    July 02, 2010 - 13:11

    The article begins with a statement that NL could be better situated to withstand and recover better than most provinces. Where is the fact supporting this statement? There are plenty that suggest otherwise.
    Our economy is resource based - the demand for those resources has dropped and will remain low until the global situation improves.
    Migratory workers to Alberta will be affected by the impact this drop in demand is having - directly affecting personal income taxes and retail spending.
    Our fishing industry derives much of its income from high end product. We have seen a dramatic decrease in demand for this type of product (lobster). Our shrimp and crab exports will be faced with the same challenge.
    Housing prices in the St. John's and area are increasing. This will lower the discretionary income of new buyers. Increased pricing may be good for city hall's tax incomes, but there is no benefit to those that live and pay taxes here.
    The population shift to urban areas is stressing overextended infrastructure - while infrastructure in rural areas is underutilized (with no reduction in operational overhead). Where will the money come from to address this shift?
    Private sector employment is decreasing - shifting more dependency on government funded income. With low commodity prices and less private sector sourced income, where will the additional money come from to support that growing payroll?
    John Steele is faced with credit challenges to expand his empire outside of the province. The relevant part of that statement is that those trying to expand within our province are faced with the same obstacles, inhibiting investment.
    Perhaps I'm missing it. Could someone please explain how this province is in a better situation than others to weather this storm as stated? I see quite the opposite - our citizens will suffer, and our leaders are doing nothing of significance to address that reality.

  • steve
    July 01, 2010 - 20:24

    Mr Kennedy...aka Germoan... believes Newfoundland and Labrador shouldn't expect much from the Federal Gov.....go on.... really...oh, I don't know...it's as easy as ABC. This must be the second part of the great Danny's plan. Use our own money to get things going. Brillant. Just Brilliant. Well at lest we still have our pride to wrap ourselves in. I hope it's keeps us fed and warm.

  • Graham
    July 01, 2010 - 20:13

    Have to give Jerome some credit here people. HE READ HIS LITTLE SPEECH JUST THE WAY DANNY WROTE IT FOR HIM. What an absolute joke Williams and his clone Kennedy have made of our Province and our Government.

  • Ken
    July 01, 2010 - 20:11

    So Minister Kennedy doesn't expect much out of Ottawa. Wonder why ? Steve and Graham have hit the nail on the head. Chickens coming home to roost. Reap what you sow... Any of this ring a bell Jerome.

  • Truth
    July 01, 2010 - 20:10

    Right on Steve, Yup and Graham. Danny is running things his way which is why, and I quote:

    ...This province has been bucking the trend in consumer confidence. In fact, a researcher says consumer confidence in Newfoundland and Labrador is possibly the highest in the western world. Corporate Research Associates CEO Don Mills says it will take a lot to shake that. Mills says this province leads the country in consumer confidence and continues to enjoy a high level of satisfaction with government.

    Thanks again for reminding everyone who we have to thank for our relatively good position compared to the rest of Canada.

  • JOHN
    July 01, 2010 - 20:09

    Did you know that even in the middle of a recession, large corp's are lobbying to keep immigration WIDE OPEN all for the purpose of keeping wages low? Find out more at fairus.org. It's funny how politicians and union leaders pretend not to understand that increasing the labour supply exponentially will make it harder for Canadians to find work and drive down wages. Maybe your elected officials need to hear from you at parl.gc.ca

  • Guess What
    July 01, 2010 - 19:56

    Guess what folks, we deserve the government that we get. Williams approval rating has recently been just shy of that which Saddam Hussein enjoyed in his heydays, and we all know how Saddam ran things don't we.

    Williams brought home the big windfall claiming we did it...we did it as he was paraded through the St. John's air terminal. Yep, he did it allright, blowing the whole wad on the teachers pension fund...which has gone up in smoke with the market meltdown.

    Then we had the ABC campaign, and we have as yet to see the negative fallout from that silliness.

    We in this province consistently elect messiah's, and where has it gotten us....really?

  • Yup
    July 01, 2010 - 19:54

    Gee Jerome, guess people were not able to understand why they have lost jobs, can not find jobs, needing to leave Fort McMurray and return home due to loss of jobs in Alberta all by themselves. Takes Dannys mouth from the south to inform the poor masses that he and Danny are the only ones that can see the future or what has been written on the walls for months.

    Guess you forgot to bring the quarterly statements from the big four oilsands outfits. See where Suncor is going? How many people from this province were working on the expansion, and have since returned to the province? Might be where your population increase has come from now does'nt it?

    And while we are on it, whats with this magic number of 1.6 Billion that you and Danny seem to find then blow, then try to get outta Exxon? Three times in the past few months this government has brought this number up. Surplus, Pensions and now the Offshore. I have a funny feeling either it never was, you spent it or you are dreaming about it. What is/was/will it be?

  • AnnD
    July 01, 2010 - 19:54

    4 new seniors bldgs, new Insurance bldg, 3 or 4 new hotels, Pleasantville development, new housing development- looks like St. Johns' will do OK

  • Willi
    July 01, 2010 - 19:48

    The article begins with a statement that NL could be better situated to withstand and recover better than most provinces. Where is the fact supporting this statement? There are plenty that suggest otherwise.
    Our economy is resource based - the demand for those resources has dropped and will remain low until the global situation improves.
    Migratory workers to Alberta will be affected by the impact this drop in demand is having - directly affecting personal income taxes and retail spending.
    Our fishing industry derives much of its income from high end product. We have seen a dramatic decrease in demand for this type of product (lobster). Our shrimp and crab exports will be faced with the same challenge.
    Housing prices in the St. John's and area are increasing. This will lower the discretionary income of new buyers. Increased pricing may be good for city hall's tax incomes, but there is no benefit to those that live and pay taxes here.
    The population shift to urban areas is stressing overextended infrastructure - while infrastructure in rural areas is underutilized (with no reduction in operational overhead). Where will the money come from to address this shift?
    Private sector employment is decreasing - shifting more dependency on government funded income. With low commodity prices and less private sector sourced income, where will the additional money come from to support that growing payroll?
    John Steele is faced with credit challenges to expand his empire outside of the province. The relevant part of that statement is that those trying to expand within our province are faced with the same obstacles, inhibiting investment.
    Perhaps I'm missing it. Could someone please explain how this province is in a better situation than others to weather this storm as stated? I see quite the opposite - our citizens will suffer, and our leaders are doing nothing of significance to address that reality.