02 February 2010

NL economy to shrink by 4.5% in 2009: RBC

From the latest RBC Economics provincial outlook:

After suffering a significant setback in its resource sector in 2009, Newfoundland & Labrador’s economy is set to jump back into growth mode in 2010. Major declines in mining and crude oil production during the past year are expected to be largely reversed. Stronger global demand for iron ore and the eventual settlement of a labour dispute at the Voisey’s Bay nickel operations are forecast to
boost metal mining output and the imminent entry into service of the North Amethyst satellite field — an expansion to White Rose — will provide a temporary lift to offshore oil production. This positive swing in a sector that represents approximately 30% of real GDP in the province will once more be the dominant factor in overall growth in 2010, contributing more than one percentage point to output. We forecast real GDP growth at 2.4%, revised up from 2% in September, and a 1.5% increase in 2011. In 2009, the slump in mining and oil
and gas extraction is likely to lop off more than six percentage points from real GDP growth, which has been revised lower to -4.5% to reflect longer-than anticipated mining operation shutdowns.

That forecast 2.4% growth in gross domestic product for 2010 puts the province in the middle of the pack among the other provinces.

Talk about a slender reed:  it is based entirely on production from the White Rose expansion.

Real growth in 2011 is positively anaemic at 1.5%.  That’s the lowest of any province.