OTTAWA, Dec. 8, 2016 /CNW/ - Newfoundland and Labrador's economy is forecast to contract in 2017 for the fourth consecutive year by 1.4 per cent, according to The Conference Board of Canada's Provincial Outlook: Autumn 2016.
"Once a growth leader in Canada, Newfoundland and Labrador is facing a difficult road ahead. Improving commodity prices will not be enough to offset weakness in the domestic economy," said Marie-Christine Bernard, Associate Director, Provincial Forecast.
- Newfoundland and Labrador's economy is forecast to contract by 0.4 per cent in 2016 and decline again by 1.4 per cent in 2017.
- The unemployment rate in the province will reach an average of 17 per cent by 2019.
- With the exception of Newfoundland and Labrador, all provinces will see their economy expand next year.
Newfoundland and Labrador's economy faces some significant challenges. As Hebron's oil project and other major projects have passed peak investment, there will be massive gaps in employment for construction workers. The lower fishing quotas for most of the major catch next year will leave scores of fishermen out of work. In addition, the provincial government will continue with austere fiscal measures in hopes of improving the fiscal balance.
These challenges will push the unemployment rate up from 14.9 per cent to an average of 17 per cent by 2019, resulting in an increased outflow of workers from the province. With the high rate of unemployment in the economy, household consumption is forecast to decline next year.
While the province's economic outlook for 2017 is bleak, two key industries – manufacturing and mining – are expected to do well. The Come by Chance refinery completed work last October that helped increase the plant's output. The manufacturing industry will also get a boost from the processing of nickel from the Voisey's Bay mine. The $14 billion Hebron offshore oil field is set to begin production toward the end of next year resulting in higher oil production. Together with an anticipated rebound in manufacturing activity, real GDP growth of 2.9 per cent is forecast in 2018. However, underlying fundamentals remain weak as the domestic economy and job creation will not turn around.
The Provincial Outlook: Autumn 2016 is available via the Conference Board's e-Library.
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SOURCE Conference Board of Canada
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