OTTAWA, March 8, 2016 /CNW/ - Saskatchewan's economy is expected to recover from last year's oil-driven recession, but growth will be very weak in 2016. Following a contraction of 2.8 per cent in 2015, Saskatchewan is expected to eke out growth of just 0.7 per cent this year, according to The Conference Board of Canada's Provincial Outlook: Winter 2016.
"The downturn in mineral and oil prices continues to weigh on Saskatchewan's economic growth this year. With the world remaining awash in oil, no recovery is expected in the province's energy sector in 2016," said Marie-Christine Bernard, Associate Director, Provincial Forecast. "However, a more favourable outlook for the agriculture sector should help the provincial economy eke out some growth this year."
- Saskatchewan's real GDP is expected to grow by only 0.7 per cent in 2016.
- The oil industry's cash flow problems, driven by the collapse in oil prices, is forcing energy companies to cut their capital investment.
- There is a lot of uncertainty in global potash markets which led some producers to curtail production plans for this year.
- B.C.'s economy will outpace all other provinces this year, posting real GDP growth of 2.7 per cent.
- Alberta is facing another recession this year as cuts in energy investment and job losses hit the economy hard.
The agriculture sector struggled through a difficult year in 2015 as drought hit the province but the sector is expected to recover this year. Growth of 11.1 per cent is forecast for 2016, as international trade gets a boost from strong demand for Saskatchewan's agriculture products.
Conditions continue to be difficult for Saskatchewan's resource sector. Facing cash flow problems, energy companies have cut their capital investment. As a result, mineral fuels production is expected to contract by 1.2 per cent this year. Saskatchewan's mineral fuel production is not expected to grow in the medium term, as conventional oil production is more sensitive to fluctuations in commodity prices. Potash prices are down from one year ago and some producers are curtailing production plans for this year.. Uranium mining will be a bright spot in the province over the next two years, thanks to robust demand from Asia.
Little job creation is expected this year, and that is causing households to hold back on their spending.
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SOURCE Conference Board of Canada
Image with caption: "Real GDP by province in 2016 (CNW Group/Conference Board of Canada)". Image available at: http://photos.newswire.ca/images/download/20160308_C6281_PHOTO_EN_637508.jpg
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