Optimism and caution — the Atlantic Provinces Economic Council’s outlook conference Thursday featured a mixture of the two.
David Chaundy, the council’s senior economist, says even with a modest slowdown next year, emerging economies — anchored by China — will still account for 71 per cent of global growth, up from 31 per cent in 1990 — a reassuring forecast for the province’s mining industry, which is expected to ramp up production over the next decade.
“Most major commodity prices will continue to remain at fairly high levels, therefore keeping the Canadian dollar close to parity with the U.S. dollar,” he said at the council’s half-day conference at the Delta Hotel in St. John’s, following the release of its annual forecast last week. As heard during the recent Mineral Resources Review conference, the province’s mining growth will help offset declining oil production, an industry so important to the provincial economy, Chaundy pointed out, that Newfoundland and Labrador has the highest percentage of exports as a share of the provincial economy — 41 per cent — of any province in the country. But if the oil and gas industry is removed from the equation, the province has the lowest percentage of exports as a share of the gross domestic product (GDP).
Fred Bergman, the council’s senior policy analyst, said investment in major projects is expected to stay at high levels through 2015 as work peaks on Hebron and Muskrat Falls, which is also when job requirements are expected to peak. Bergman said those two major projects alone are expected to add 5,700 direct jobs — 3,000 for Hebron and 2,700 for Muskrat Falls at the peak — and those jobs won’t all go to labourers and tradespeople.
“In the initial growth period, there’s going to be a demand for workers in the construction field, the professional services field, because looking at the data there’s a strong link between construction and professional services. Professional services (are) basically your accountants, your lawyers, your architects, your engineers, your project management consultants — these are the types of people needed to bring big projects to fruition.”
Despite Canada’s relatively good position to ride out lingering global economic headaches — the country’s debt-to-GDP ratio is the lowest in the G7 countries — there are risks that could derail the world’s economic recovery that could affect Canada, noted Bergman. While stimulus measures in the U.S. could boost growth next year, major deficit reduction is needed, he said. The sovereign debt crisis in Europe also needs to be solved without triggering a banking crisis with global ramifications, he said.