OTTAWA, Aug. 1, 2017 /CNW/ - Economic prospects for the territories are improving thanks to higher prices for metals, precious metals and diamonds. According to The Conference Board of Canada's Territorial Outlook, the Northwest Territories and Nunavut can expect strong growth this year, while a mild contraction in the economy is forecast for Yukon.
"The outlook for most mineral commodities is much brighter today than a year ago," said Marie-Christine Bernard, Associate Director, Provincial and Territorial Forecasting. "While, financing conditions in the mining sector remain difficult, conditions are expected to improve with a number of projects set to get under way before the end of the decade."
- Yukon can expect a mild contraction of 0.7 per cent this year, followed by strong growth between 2018-20.
- The Gahcho Kué diamond mine is entering full production this year, fuelling GDP growth of 12.2 per cent in the Northwest Territories this year.
- Nunavut's economy will expand by 6.4 per cent this year thanks to planned mineral production increases at Meadowbank and Mary River.
Now that commodities prices are improving, Capstone has decided to keep production going at its Minto mine. Mineral production at the Minto mine is expected to drop this year, but Capstone intends to ramp up production again in 2018. That should be enough to tie the Yukon's economy over before construction begins on two new mines that are set to open before 2020. Both the Eagle Gold and Coffee Gold mines are expected to begin operations in 2019, driving growth of more than 20 per cent in the territory's mining sector.
The mining sector's renewed strength will also provide a boost to related industries, including transportation and warehousing, and commercial business services. The construction industry should also be a bright spot for Yukon's economy over the next few years. Public spending will drive growth in the sector until construction of new mining projects get under way next year. Job creation is expected to improve in the territory over the next five years, averaging 790 new jobs annually.
In all, Yukon's economy is forecast to contract by a mild 0.7 per cent this year, followed by a few years of strong growth, averaging 6.6 per cent over 2018–20.
Nunavut's economy has stayed strong through the correction in commodity prices, and that will continue in 2017, with a 6.4 per cent expansion forecast for the territorial economy. Metal mining is the single largest contributor to economic growth, and all operating mines are planning increases in production, including TMAC Gold's Hope Bay mine, which opened this year. Production will continue to ramp up at Hope Bay next year, but Agnico Eagle's Meadowbank mine is expected to wind down operations as its reserves are drawn down. That will set the stage for a 0.2 per cent decline in total GDP in 2018.
Outside of mining, Nunavut's construction sector will surge this year, but that will be followed by three weaker years as a number of large projects, including the Canadian High Arctic Research Station, are completed over the next two years. Meanwhile, service-based industries will benefit from the territory's strong population growth. Nunavut's employment is forecast to grow slightly faster than the labour force, allowing for more solid increases in real wages and salaries per employee.
Economic growth in the N.W.T. will be strong this year at 12.2 per cent as De Beer's Gahcho Kué diamond mine enjoys its first full year of production following its opening in 2016. The outlook beyond 2017, however, is not as encouraging. No metal mines have been in operation in the territory since the Cantung mine closed in 2015, and its oil and gas production continues to decline. N.W.T.'s real GDP is forecast to decline by an average of 1.7 per cent annually over 2018-20.
With the diamond mining industry maturing and Diavik ceasing operations around 2025, the remainder of the Northwest Territories' economy will struggle. The territory's construction industry is expected to continue its decline this year, mainly due to the completion of the Gahcho Kué mine and the completion of large public infrastructure projects. Meanwhile, an aging population and declining mining output will limit job creation over the next 15 years.
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SOURCE Conference Board of Canada
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