Shaky Global Economy Adds Uncertainty to Otherwise Bright Outlook for Canada's Territories

Mar 18, 2013, 09:37 ET from Conference Board of Canada

OTTAWA, March 18, 2013 /CNW/ - The global economy is making its presence felt in Canada's territories, dampening - but not dousing - the mining boom underway in Canada's North, according to Territorial Outlook: Winter 2013, published by The Conference Board of Canada's Centre for the North.

"The territories are not immune to the vulnerability of the global economy," said Marie-Christine Bernard, Associate Director, Forecasting and Analysis. "New mine development and production will provide a solid economic foundation for Canada's territories. However, base metal prices are only now firming up, after slipping in 2012. And tight financial markets are making it more difficult for mining companies to raise capital, which is delaying or downsizing projects."

  • Real gross domestic product (GDP) in the territories as a whole is forecast to advance by 2.8 per cent in 2013 and by 5.4 per cent in 2014.
  • In comparison, Canada's overall real GDP growth in 2013 is expected to be 2.2 per cent.
  • Despite short-term uncertainty, long-term global demand for metals suggests that the mining outlook for Canada's North is bright.

Nunavut's mining sector is experiencing both accelerating growth and downside risks. Production at the Meadowbank gold mine in 2012 far exceeded initial predictions, and output is expected to rise over the next three years. On the other hand, the Mary River iron ore project was scaled back from a planned $4-billion expenditure to a $740-million project. The revised plan is expected to produce less iron ore and not include a rail line or the Steensby Inlet port, although it will begin operations earlier than it would have under the larger project. Even with the downgrade, overall economic growth in Nunavut is forecast to be 3.4 per cent in 2013 and 8.8 per in 2014.

The Northwest Territories are expected to grow by 0.2 per cent in 2013, which is nevertheless an improvement over declining real GDP in 2011 and 2012. The diamond mining industry is both maturing and entering a long-term decline. Luckily for the territory, its fortunes are not all tied to the diamond industry - several metal ore mines will be developed and explored over the next few years. Stronger economic growth of 2.6 per cent is forecast for 2014.

Yukon's real GDP is forecast to increase by a strong 6.3 per cent in 2013 as mineral production continues to climb and construction gets a lift from mineral development. Yukon's next mine will be Victoria Gold's Eagle gold mine, which will begin construction this year.

The Territorial Outlook, published twice yearly, examines the economic and fiscal outlook for each of the territories, including output by industry, labour market conditions, and the demographic make-up. This forecast is funded through the Conference Board's Centre for the North. The Centre's main purpose is to work with Aboriginal leaders, businesses, governments, communities, educational institutions, and other organizations to provide insights into how sustainable prosperity can be achieved in the North. Over its five-year mandate, the Centre for the North will help to establish and implement strategies, policies and practices to transform that vision into reality.

SOURCE Conference Board of Canada