OTTAWA, June 13, 2016 /CNW/ - Newfoundland and Labrador's economy is going through a rough patch, with real GDP growth of 0.2 per cent this year. In addition, Newfoundland and Labrador will be the only province expected to face a recession in 2017, according to The Conference Board of Canada's Provincial Outlook: Spring 2016.
"Along with the downturn in the resources sector, Newfoundland and Labrador is facing tax hikes and government cuts that will considerably dampen the economic outlook over the next two years," said Marie-Christine Bernard, Associate Director, National Forecast.
- Newfoundland and Labrador's economy is forecast to expand by only 0.2 per cent in 2016.
- The province is also the only one to face a recession in 2017.
- Only four provinces are forecasted to see real GDP growth above 2 per cent this year: British Columbia, Ontario, Manitoba, and P.E.I.
- The commodity price slump will continue to hurt the economies of Newfoundland and Labrador, Saskatchewan, and Alberta. The wildfires in northern Alberta will have a short-term economic impact but rebuilding efforts will lift real GDP in 2017.
As a result of lost revenues from lower commodity prices, the provincial government has resorted to austere fiscal measures, including increasing direct and indirect taxes on consumers and businesses to fund its programs.
Weaker commodity prices have also whittled down the cash flow of most mining operations in the province, resulting in project delays and cancellations. Meanwhile, major projects currently under way are in their last phase of development and therefore not expected to contribute any further to growth.
However, it is not all bad news for the province. Manufacturing and mining will provide a slight improvement to Newfoundland and Labrador's weak economy. The Long Harbour hydromet facility will continue to increase processing of nickel, copper, and cobalt ore from the Voisey's Bay mine. Resumption of offshore oil production, off-lined last year by technical problems, will provide an important lift to real GDP for this year. In addition, the new Hebron offshore oil field is expected to begin production toward the end of next year and will give a much-needed boost to the province's mining sector.
Furthermore, the Bay de Verde fish plant that was destroyed by fire earlier this year should resume operations by 2017, helping to restore the more than 300 jobs displaced and growth in the province's manufacturing sector.
The Provincial Outlook: Spring 2016 is available via the Conference Board's e-Library.
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SOURCE Conference Board of Canada
For further information: Yvonne Squires, Media Relations, The Conference Board of Canada, Tel.: 613- 526-3090 ext. 221, E-mail: [email protected]; Juline Ranger, Director of Communications, The Conference Board of Canada, Tel.: 613- 526-3090 ext. 431, E-mail: [email protected]