OTTAWA, Feb. 23, 2015 /CNW/ - Newfoundland and Labrador is facing a second consecutive year of economic decline in 2015, as business investments take a hit from plummeting metal and crude oil prices, according to The Conference Board of Canada's Provincial Outlook - Winter 2015.
"Like most oil producing regions, Newfoundland is seeing its share of cuts in oil-related investments. However, Newfoundland's economy is facing a double hit of low oil prices, as well as low metal prices," said Marie-Christine Bernard, Associate Director, Provincial Forecast. "Although the Conference Board expects that oil prices will recover to above US$60 per barrel by the end of the year, the economic outlook for the province will be dim over the next two years."
- Newfoundland and Labrador's economy is forecast to decline by 0.6 per cent in 2015.
- Ontario, Manitoba and British Columbia are expected to be the economic growth leaders in 2015.
- With an estimated $375 million in income generated in Atlantic Canada from fly-in / fly-out workers, the slowdown in Alberta's energy sector will have far reaching consequences for the province.
Following a decline in GDP of 2.3 per cent last year, Newfoundland and Labrador's economy is forecast to contract by 0.6 per cent this year and remain flat in 2016.
The provincial labour market will continue to feel the effects of the weakening economy, with the province expected to shed jobs again this year. The weak labour market will, in turn, lead to lower household spending over the next two years.
One of the few bright spots in the province's outlook is the manufacturing sector, which is expected to benefit from the Long Harbour hydromet facility processing of nickel, copper, and cobalt ores originating from the Voisey's Bay mine. This will help offset weaknesses from the mining and construction sectors.
Newfoundland and Labrador's very high dependence on oil royalties will have a severe impact on its provincial budget. Coupled with lower income tax revenues, the provincial government is facing a significant deficit this fiscal year.
Ontario, Manitoba and British Columbia are expected to be the economic growth leaders in 2015, fuelled by the lower Canadian dollar, stronger U.S. economy and stronger consumer confidence. Lower levels of capital spending in the energy sector, will lead to a recession in Alberta, with the growth forecast to decline by 1.5 per cent in 2015.
The Conference Board of Canada will host a webinar, Canada's Fiscal and Economic Outlook: Small Winners, Bigger Losers, on March 13, 2015 11:00 AM EST.
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