TORONTO, March 19, 2013 /CNW/ - Weaker-than-anticipated construction
spending intentions for 2013 have prompted RBC to downgrade
Saskatchewan's real GDP forecast from 3.5 per cent to 2.9 per cent,
according to the latest RBC Economics Provincial Outlook released today. The provincial economy will, however, benefit from a
modest uptick in agricultural output, and an expected recovery in
Statistics Canada's recently released Public and Private Investment
survey indicated that capital spending intentions in Saskatchewan for
2013 are disappointing; spending is expected to grow by only two per
cent, down from 6.5 per cent in 2012 and 11.9 per cent in 2011.
The RBC report indicates that, in part, this pullback likely reflected
increased caution from potash producers in the face of decreased demand
in the past year. As a result, RBC expects overall construction
spending to remain modest in 2013, rising only one per cent following
an expected 4.5 per cent rise in 2012.
"A slump in potash sales last year led to increased inventories in the
province; however, some large sales agreements have been reached early
this year with key overseas customers," stated Craig Wright, senior
vice-president and chief economist, RBC. "Stronger demand overseas,
along with increased demand from U.S. producers who are looking to
aggressively recover from the disastrous drought-ravaged 2012 harvest
in the mid-west, should rekindle demand and production of potash in
Saskatchewan this year."
Higher demand for potash is expected to drive mining output between 4.5
per cent and five per cent higher this year and next, up from an
estimated two per cent gain in 2012. Growth in this sector will also be
helped by increased production and demand for uranium.
"We anticipate that strength in mining activity will provide a greater
lift to construction spending in 2014, which will be the main factor
behind the projected further increase in GDP growth to 3.6 per cent
next year," said Wright.
The RBC forecast also assumes some modest strengthening in agricultural
output in 2013 relative to 2012. However, this is predicated on the
assumption that heavy winter snowfall and risk of flooding does not
materially delay spring planting.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online of 8 a.m. ET today at rbc.com/economics/market/pdf/provfcst.pdf.
For further information:
Craig Wright, RBC Economics Research, 416 974-7457
Paul Ferley, RBC Economics Research, 416 974-7231
Elyse Lalonde, Corporate Communications, RBC Capital Markets, 416 842-5635