Slow growth for St. John’s, province: report

Daniel
Daniel MacEachern
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Economic growth for the city of St. John’s, and for the province as a whole, has slowed, according to a report from the Conference Board of Canada. — Telegram file photo

A new report from the Conference Board of Canada predicts slight growth for the St. John’s economy this year.

The report, released Thursday, predicts that, despite expected double-digit construction growth in 2012, reduced production from maturing oil wells will limit overall growth in the province, although less so in St. John’s.

St. John’s gross domestic production is forecast to grow to $8.9 billion this year, up 1.1 per cent from 2011, a dropoff from growth of 5.4 and 6.9 per cent in 2011 and 2010 respectively.

“Much of the slowdown can be blamed on weaker primary and utilities output, expected to fall in line with lower offshore oil production,” reads the report.

“Lower growth is also expected in non-commercial services and in public administration and defence as government spending is reined in.”

While non-residential construction is forecast to have “another banner year,” according to the report, the housing market is starting to feel the impact of a slower economy, resulting in a reduction in housing starts this year and next.

The provincial economy is expected to barely move the needle on the growth next year, says the Conference Board, which forecasts 0.5 per cent growth in Newfoundland and Labrador’s GDP, to $18.1 billion.

Maintenance on the Terra Nova and White Rose will cause a double-digit drop in production this year, and sagging Hibernia production means a 17 per cent drop in output for the mineral fuels industry in 2012.

 Even with a full year of prod-uction from Terra Nova and

White Rose in 2013, the industry is still forecast to contract 1.4 per cent.

On the bright side, the report says growth in mining and construction will boost wages and salaries and spur job creation.

But the report also warns of potential problems on the Lower Churchill: “Opposition to the Muskrat Falls hydroelectric project could push back its development schedule, dampening growth in the construction industry.”

The Conference Board’s report is slightly sunnier than a recent report from the City of St. John’s, released two weeks ago. In it, GDP is forecast to grow 0.8 per cent this year.

 

dmaceachern@thetelegram.com

Twitter: TelegramDaniel

Organizations: Conference Board of Canada

Geographic location: Terra Nova, White Rose, Newfoundland and Labrador

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Recent comments

  • Derrick
    July 01, 2012 - 11:46

    Solomon Don't worry, Mount Pearl will be forced to join St.John's as it is the only way to address the under funded pension plan for St.John's employees, they must increase the divider as the cost per household is staggering, it gets worst with a 1.75% 10 year bond rate, which looks to be the rate for a long time.

  • Derrick
    July 01, 2012 - 05:48

    The housing bubble is created by Bank of Canada, policy of monetizing the Federal government debts using bond purchases, back door transfer of money to the banks, this has enabled very loose lending practices, the next move will be Bank of Canada excepting car loans & housing as third party collateral, they have to fight this depression tooth and nail as they know what’s on the other side. Sadly this can’t end well as it destroys savers and pension plans & reduces the time value of money. Inflation is the only way out.

  • Jack
    June 30, 2012 - 22:31

    According to WikiPedia, Newfoundland and Labrador's 2010 GDP was $28.192 billion, perhaps even higher in 2011. Based on the $10 billion GDP gap, I'm wondering where the Conference Board of Canada got the $18 billion GDP figure? Something doesn't sound right Mathematically. Source - WikiPedia, List of Canadian Province and Territories by Gross Domestic Product, http://en.wikipedia.org/wiki/List_of_Canadian_provinces_and_territories_by_gross_domestic_product

  • Jack
    June 30, 2012 - 22:21

    If mining and natural resource sector growth is expected, then why are resource based companies like Canadian Imperial Venture, Vulcan Minerals, Altius Minerals, and Golden Dory Resources shares currently trading at record lows. As for the GDP, their GDP figures are way off as its at least $30 billion, NOT $18 billion according to WikiPedia. Maybe the Conference Board of Canada miscalculated the province's GDP there.

  • Solomon
    June 30, 2012 - 18:18

    Amalgamation of NE Avalon and especially St. John's/Mt Pearl would give the city a fighting chance to develope and compete w/ Halifax. How do we get rid of the self serving bunch who are playing at running Mt. Pearl.

    • Jack
      July 01, 2012 - 10:59

      Solomon, since I'm originally from Halifax, Nova Scotia, I can tell you from my experience that amalgamation is not a wise solution to the stagnant growth problems. In fact, amalgamation will cause more problems as bureaucratic and municipal government costs will dramatically go up, bylaw redundancy problems as HRM does not have unified bylaws, suburban and semi-rural property taxes will go up significantly but residents will not received improved government services and Purcell's Cove is good example, urban sprawl problems will increase, government infrastructure will weaken, just to name a few. Lessons learned from the Halifax amalgamation. Regional municipalities do not work.

    • JT
      July 03, 2012 - 08:00

      St. John's will never be able to compete with Halifax, simply due to the fact the St. John's keeps installing inept councils with no vision, or any concept on how to properly opertate a city. Those who continuosly bang the amalgamation drum would be better advised to look within the Capital city for the root cause of it's problems instead of blaming other communities on the NE Avalon for existing.

  • Mike Walsh
    June 30, 2012 - 17:04

    As St. John's goes, the NE Avalon goes. The housing bubble is going to burst - sooner or later.