TORONTO, Sept. 10, 2012 /CNW/ - Strong increases in farm incomes will be
a key factor driving growth in Saskatchewan's economy to a rate well
above the national average this year, according to the latest RBC Economics Provincial Outlook released today by RBC Economics Research. RBC projects provincial real
GDP to rise by 3.6 per cent in 2012, one of the strongest rates in the
"In mid-2012, we saw key agricultural areas around the world, including
the drought-ravaged U.S. farm belt, fall victim to declining
production. This put upward pressure on agricultural prices," said
Craig Wright, senior vice-president and chief economist, RBC.
"Saskatchewan's agricultural sector, on the other hand, experienced
large increases in production, with volume estimates for the province's
three major crops up by almost nine per cent. Solid increases in
provincial output paired with rising prices should bode well for a
healthy jump in farm incomes."
Over the past couple of years, RBC notes that Saskatchewan had been
benefiting from strong commodity prices for most of its major exports,
particularly commodities such as oil and potash. In recent months,
however, non-food commodity prices have come under some downward
pressure due to weakening global demand.
"In the first half of the year, potash operations in Saskatchewan have
cutback on production and some companies have announced delays or
scaling back of capital expenditure projects," explained Wright.
"However, we expect that global demand for potash and other natural
resource commodities - although weaker than previously anticipated -
will remain robust enough to keep prices at historically elevated
levels. Mining and construction activity should remain in expansion
mode this year."
The Outlook indicates that Saskatchewan's solid economic momentum was
recently buoyed by an acceleration in provincial employment growth
following surprisingly modest gains in 2011. Recent
stronger-than-expected gains in manufacturing sales, wholesale trade
and retail sales also show the underlying vigour in the provincial
"Although we expect some slowing in agricultural production in 2013,
strengthening activity in other natural resource industries will result
in real GDP growth of four per cent - Saskatchewan will remain a growth
leader among the provinces," added Wright.
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 as of 7 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