Offshore oil production to fuel economic growth in St. John's

Aug 07, 2013, 09:00 ET from Conference Board of Canada

OTTAWA, Aug. 7, 2013 /CNW/ - Increased offshore oil production will make St. John's, Newfoundland and Labrador the fastest growing economy among 15 Canadian cities in 2013, according to The Conference Board of Canada's Metropolitan Outlook-Summer 2013.

"With economic growth forecast to reach five per cent this year, St. John's is expected to more than recover from a 3.2 per cent decline in 2012," said Mario Lefebvre, Director of the Conference Board's Centre for Municipal Studies. "As the hub for the provincial offshore petroleum industry, St. John's economy will get a lift from higher offshore oil and gas production. Growth in the construction sector will continue to be positive this year, though more modest than in recent years."

Aside from St. John's, most of the cities covered in the Summer 2013 edition of the Metropolitan Outlook are expected to post modest economic gains. In all, 13 of the 15 Census Metropolitan Areas (CMAs) can expect growth in real gross domestic product (GDP) of between one and two per cent.

  • Solid construction activity in several Southern Ontario cities will help to offset a slowdown in manufacturing and the impact of provincial government fiscal restraint .

  • Cities in Quebec are set for a bumpy ride as the economy faces another weak year in investment, coupled with the government's efforts to balance the budget.

  • Improvements in the manufacturing sector will contribute to economic growth in cities such as Abbotsford-Mission, Moncton, and Thunder Bay.

The construction sector will give a slight economic boost to some cities in Southern Ontario. Most of that growth will come from non-residential projects, as housing starts are forecast to remain weak across the province. One exception to the slowing pace of residential construction is in Oshawa, which continues to benefit from solid population growth. Thanks to sound overall construction activity, Oshawa's economy will expand by two per cent, the only CMA in this edition of the outlook besides St. John's to achieve significant growth.

Kitchener-Cambridge-Waterloo's real GDP is forecast to expand by 1.6 per cent, its slowest pace of growth since 2009. The slower growth will be attributable in part to a slowdown in manufacturing. But in 2014, initial work on a light-rail transit system will energize the local construction sector and push total GDP growth to 2.9 per cent.

Windsor's economy is forecast to continue to achieve modest growth, reaching 1.5 per cent in 2013. Weakness in the services sector will limit St. Catharines-Niagara's economic growth to 1.4 per cent this year, slightly below the pace recorded in the previous two years.

London's economic growth is forecast to be relatively soft at 1.2 per cent this year. Growth will be kept at bay due to ongoing restraint in public sector spending and an expected decline in manufacturing output. Sudbury's economy will expand by 1.2 per cent as well, as government cutbacks weigh down modest growth in mining. The fiscal belt-tightening will be particularly hard on Kingston, where health and education's share of economic activity is nearly double that of Ontario as a whole. Not surprisingly, economic growth is expected to be just one per cent this year.

The construction sector is forecast to contract again in 2013 in Moncton, thanks to weaker housing starts. However, widespread growth among the remaining sectors will still lead to a 1.9 per cent increase in real GDP in the area for this year. Negative growth in the construction sector is also expected in Abbotsford-Mission this year. Fortunately, output in the services sector will see some improvement so that total real GDP growth should reach 1.9 per cent in 2013. Manufacturing gains in Thunder Bay will help offset slow services sector growth, supporting GDP growth of 1.1 per cent. In Saint John, New Brunswick, the economy will grow by 1.1 per cent as well, an improvement over last year's decline, but the CMA's outlook remains limited by weakness in construction and in wholesale and retail trade.

Cities in Quebec are set for a bumpy ride as the economy faces another weak year in investment, coupled with the government's efforts to balance the budget. Saguenay's economy will expand by 1.5 per cent this year, partly because of growth in the forestry and mining sectors. In Sherbrooke, gains in wholesale and retail trade and in finance, insurance, and real estate will drive GDP growth of 1.5 per cent. Trois-Rivières faces another tough year, as the shutdown of the Gentilly-2 reactor will be responsible in large part for a decline of 2.4 per cent in the area's real GDP.


SOURCE Conference Board of Canada