HALIFAX—Economic growth remains sluggish in Atlantic Canada and is expected to underperform the national average again this year, according to a new report from BMO Economics.
Atlantic Canada: Assessing the Challenges and Opportunities notes that real gross domestic product in Atlantic Canada grew at just a 0.1 per cent annualized rate in the five years through 2012 versus 1.1 per cent for all of Canada.
In 2013, the financial firm expects growth of five per cent in Newfoundland & Labrador, driven by a rebound in oil production, 1.5 per cent in Prince Edward Island, 1.4 per cent in Nova Scotia and 0.9 per cent in New Brunswick.
Atlantic Canada will continue to benefit from large-scale capital projects, including the Hebron offshore oil project, the Muskrat Falls hydro project and the Royal Canadian Navy’s plans to spend $25-billion on shipbuilding in Halifax through 2030, helping to create some 8,000 new jobs.
“Overall, private sector capital spending is expected to rise four per cent this year after jumping more than eight per cent in 2012, with the vast majority of the strength in Newfoundland & Labrador,” BMO economist and report author Robert Kavcic said in a statement.
Kavcic also noted that skilled labour scarcity remains a key issue for the region, as skilled labour continues to migrate to Western Canada.
“Net out-migration from Atlantic Canada totalled more than 10,000 people in the four quarters through (the third quarter of) 2012, closing in on peak levels seen at the height of Alberta’s energy boom in 2006,” Kavcic said.
The BMO report indicated that Atlantic Canada’s productivity record has been relatively strong over the past decade by Canadian standards, but has trailed off in recent years.
Output per hour rose at a 0.7 per cent annualized pace in the last 10 years, matching the national trend.
“Atlantic Canada needs to deal, and deal well, with both fiscal austerity and economic renewal to improve competitiveness and seize the opportunities inherent in the changing global economy,” BMO vice-chair Kevin Lynch said.
“Improving productivity and innovation, focusing on immigration and talent development, and building the capacity to trade in non-traditional markets are all parts of the recipe for success today and tomorrow.”