Slump in metal and mineral prices puts chill in Territories’ economic outlook

OTTAWA—With mineral and metal prices still down, Yukon and the Northwest Territories are facing a decline in real gross domestic product this year, according to the Conference Board of Canada’s Territorial Outlook. Overall real GDP growth in the territories is expected to contract by 0.9 per cent, the first setback since 2011.

“The economic forecast for the territories this year is bleak as a slump in mineral and metal prices and the difficulty in getting financing have led to mine shutdowns and new mining projects being put on indefinite hold,” said Marie-Christine Bernard, associate director of provincial and territorial forecasts. “The downturn in the mining sector is cyclical and market conditions should improve over the remainder of the decade.”

For the Yukon economy specifically, it has been a difficult three years. After posting declines in economic growth in both 2013 and 2014, the territorial economy is expected to contract by 3.4 per cent in 2015, according to the report. The Conference Board of Canada said that as commodity prices slip, all mines in the territory have faced difficulties and only the Minto mine is producing. A turnaround in the territory’s real GDP growth is forecast in 2016, however, as mineral production increases at Minto.

While the Northwest Territories’ mining industry is more mature, production is still expected to decline, and economic growth in the Northwest Territories will be less than stellar over the next two years, the report finds. Real GDP is expected to decline by 2 per cent in 2015. The Conference Board of Canada pointed to a new diamond mine, Gahcho Kué, which has just obtained financing to begin construction, as a project that will improve the territory’s outlook over the next few years.

Averse to the other territories, Nunavut’s outlook is more promising this year, led by the construction industry. Construction has been enjoying exceptional growth since 2012 and the near-term outlook remains positive, the report found. There are a number of public sector projects helping to bolster construction as well, such as the Canadian High Arctic Research Station and the upgrade to Iqaluit’s airport. Overall, real GDP in Nunavut is expected to grow by 3.8 per cent in 2015, the highest rate of growth among the provinces and territories. The report also noted development of the Mary River iron ore mine and rising mineral production at Meadowbank will bolster Nunavut’s economy.