Challenge is to turn resource wealth into sustainable economic growth
OTTAWA, May 15, 2014 /CNW/ - Newfoundland and Labrador surpassed all provinces—and all major developed countries—in economic growth in 2013. This result contributed to Newfoundland and Labrador's overall "A+" grade in The Conference Board of Canada's "How Canada Performs: Economy" report card, the first to compare the 10 provinces and 16 countries on indicators of economic performance.
Released today, and building on previous "How Canada Performs" analyses, the Economy report card is the first of six to be produced over the next year on Canadian and provincial socio-economic performance.
Only three of the 26 jurisdictions covered in the Economy report card — Alberta, Saskatchewan, and Newfoundland and Labrador — get overall "A+" grades.
"Newfoundland and Labrador has had an extraordinary run of economic success in the past decade or so," said Glen Hodgson, Senior Vice-President and Chief Economist. "The high prices for many of its commodities over the decade have led to solid gains in jobs, income, and spending, which have boosted real GDP growth.
"However, its reliance on energy exports means that growth can be susceptible to volatility in global prices and production. It is unlikely that Newfoundland and Labrador will remain a top performer as oil production and construction activity slow down in 2014 and 2015."
- Newfoundland and Labrador's income per capita has improved from a "D" grade in the 1990s, to its current "B" grade.
- Reliance on energy exports means that the provincial economy is susceptible to volatility in global prices and production.
- Investment in the oil and gas sector boosted Newfoundland and Labrador's level of labour productivity in 2012 to the second highest among the provinces.
In the 1980s and 1990s, it was rare for Newfoundland to earn a high grade for GDP growth. Since 2002, the province began scoring more "A"s for GDP growth, in line with the development of its offshore energy resources and the rise in oil prices due to high demand from emerging markets such as China. However, it earned a "D" grade in 2008 and 2009 as world oil prices plunged as a result of the severe global recession, and another another low grade in 2012 thanks to a drop both in metal mining prices and in oil production due to maintenance programs.
The province earns a "B" on its standard of living, as measured by income per capita. Newfoundland and Labrador moved up from a "D" in the 1990s, to a "C" in the 2000s, and now to a "B" grade. Currently, the province's per capita income levels are close to that of Switzerland.
Newfoundland and Labrador ranks high on employment growth, scoring an "A" grade, up from a "C" average in the 2000s. However, its unemployment rate remains a "D". At 11.4 per cent in 2013, only P.E.I. and Ireland had higher unemployment rates in 2013.
Productivity is the single most important determinant of a country's prosperity over the longer term, as it is a measure of how efficiently goods and services are produced. Newfoundland and Labrador's productivity performance has mirrored the performance of its mining sector and offshore oil resources. Newfoundland and Labrador's productivity growth fell by an average of −2.8 per cent each year between 2008 and 2012, due to a slowdown in oil production. This five-year growth rate was below the worst-performing international peer country, earning the province a "D-" grade.
Yet, between, 2001 and 2007, the province posted an average annual compound growth in labour productivity of seven per cent. As a result, strong capital investment in the province boosted the level of labour productivity to the extent that, in 2012, Newfoundland and Labrador had the second highest labour productivity level among the provinces.
Newfoundland and Labrador earned an "A+" grade for inward greenfield FDI over the five-year period of 2008 to 2012, topping all provinces and international peers. Greenfield FDI is investment that expands an existing business or creates a new business, as opposed to a merger or acquisition. Newfoundland and Labrador obtained more than three times the FDI that would be expected from an economy of its size.
However, Newfoundland and Labrador's grade for outward greenfield FDI flows between 2008 and 2012 was a "D-" only P.E.I. ranked lower.
The Conference Board will hold an Atlantic Canada Business Outlook Webinar on June 24, 2014 at 3:00 p.m. Newfoundland time.
How Canada Performs is an ongoing research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada's socio-economic performance. The How Canada Performs website presents data and analysis on Canada's performance compared to peer countries in six performance categories: Economy, Innovation, Environment, Education and Skills, Health, and Society.
This is the first year that provincial and territorial rankings are included in the analysis.
The Education and Skills report card will be released in June.
SOURCE: Conference Board of Canada
For further information:
Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221