Saskatchewan to lead growth in all provinces in 2012

REGINA -- Saskatchewan should post solid 2.8-per-cent real GDP growth in 2011 — second only to Alberta at 3.1 per cent — then lead the nation with 2.9-per-cent growth in 2012, thanks to strong activity in the resource sector and a rebound in agriculture, BMO said Wednesday.

“Saskatchewan’s economy has again been challenged by wet weather and another weak crop year,” said BMO Capital Markets in its latest provincial monitor. “Real crop and animal production plunged 19 per cent last year amid extremely

wet weather, shaving more that two percentage points from real GDP growth.”

Flooding had a negative impact again this year, as insurance claims for unseeded acres rose to a record $329 million, the report said. However, recent Statistics Canada reports indicate crop production should by 20 per cent higher this year than last.

Potash production continues to expand, though at a more modest pace than that seen coming out of the 2009 recession. Overall, potash production was up 22 per cent year over year in the first half of 2011.

BHP Billiton’s proposed Jansen mine, which would be the world’s biggest at eight million tonnes annually, is on track to begin production in 2015, and the company is actively exploring more mine sites. German potash miner, K+S,

is investing an estimated $2.5 billion to develop its Legacy Project, a solution potash mine near Bethune, which is also expected to begin producing in 2015.

Exploration activity in the oil and gas sector is also strong in the Bakken formation in the southeast, and the province is

expecting four per cent annualized growth in oil production through fiscal 2013-14.

Resource-sector investment is supporting the labour market, as the province boasted Canada’s lowest unemployment rate at 4.6 per cent in September, BMO said.

“A tight labour market, solid job prospects and relatively low living costs should continue to drive population growth, and combined with a modestly lower tax burden, ... will support consumer spending and the housing market.” Retail sales are up more than seven per cent year over year through July, the fastest pace in the country, the report added.

bjohnstone@leaderpost.com
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