Saskatchewan will lead the nation in economic growth in 2012, according to the Bank of Montreal (BMO). “Real GDP will likely expand 3 per cent this year, helped by a rebound in agriculture output, before cooling slightly to a league-leading 2.9 per cent pace in 2012,” said Robert Kavcic, an economist with BMO Capital Markets.
“Much better growing conditions during the summer helped the sector, and agriculture exports were up more than 16 per cent year-over-year through September,” Kavcic said in BMO’s latest provincial monitor. “Overall crop production should be up nearly 9 per cent in 2011, according to Statistics Canada estimates, with good-to-excellent quality reported.”
Resource-sector activity remains robust, said the report released Wednesday. “Potash production was up 25 per cent year-over-year through September, and the sector will continue to support growth in Saskatchewan,” Kavcic said.
BHP Billiton’s Jansen potash mine is on track to begin production in 2015, while K+S recently announced plans to develop its Legacy Project, 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 southeastern Saskatchewan, and the province is expecting 4 per cent annualized growth in oil production through fiscal 2013-2014, the report said.
Commodity-sector investment is supporting the labour market and driving wage growth. “The province’s unemployment rate has averaged just 4.9 per cent, while average weekly earnings are up a firm 4.8 per cent year-over-year, even as the national average has cooled significantly,” said Kavcic.
“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 7 per cent year-over-year, the fastest pace in the country.”
BMO said Saskatchewan will regain the economic growth title in 2012, ahead of Alberta at 2.8 per cent. Canada is expected to see 2 per cent GDP growth in 2012.
