Canadian economies to grow in 2016/17, bolstered by mining

JOHANNESBURG (miningweekly.com) – A number of Canadian provinces are expected to see an uptick in their economic growth in the year ahead, with Manitoba expected to be among the top provincial performers in 2016 and 2017, posting real gross domestic product (GDP) growth of 2.5% in 2016 and 3% in 2017.

This was on the back of strong construction, manufacturing and service industries, bolstered by the fact that production at two new mines was ramping up, boosting output in metal mining.

At the same time, all the key segments of the province's manufacturing sector were expected to benefit from the lower Canadian dollar and a stronger US economy.

Saskatchewan's economy was, meanwhile, expected to bounce back from recession, with real GDP growth forecast to expand by 2% next year, following on from an expected 1% contraction this year.

The contraction was owing to a drop in crude oil prices and drought conditions over the summer months. “However, the recession will be short-lived,” said Conference Board of Canada provincial forecast associate director Marie-Christine Bernard.

Both potash and uranium mining in the province had bright prospects over the next two years. While potash mining was still struggling with weak prices, production volumes were expected to increase next year and in 2017.

The recent expansions at the Rocanville and Vanscoy mines would further increase potash output. Meanwhile, uranium production was also set to ramp up owing to the start of operations at the Cigar Lake uranium mine in 2014.

However, the bright outlook for metal mining and nonmetal mining would not be enough to offset difficulties in the oil and gas sector, which was expected to contract by 2.8% in 2016.

Oil prices were also expected to recover slowly – keeping drilling activity depressed for the next two years.

The forecast for Atlantic Canada was mixed in 2016. Newfoundland and Labrador's economy were set to contract again, Prince Edward Island and New Brunswick were expected to see modest growth, while the outlook in Nova Scotia was more favourable.

The slump in oil prices pulled Newfoundland and Labrador into recession this year and the outlook remained weak for the next two years.

In addition, the province was facing the challenge of low prices for both oil and metals, which would have a negative impact on near-term investment and production decisions.

Overall, real GDP growth would remain flat over the next two years, contracting by 0.8% in 2016 but expanding by 0.2% in 2017.

Meanwhile, Nova Scotia's economy was benefiting from offshore exploration activities. After an estimated 1.8% gain in 2015, real GDP was forecast to expand 2.3% in 2016 and 1.7% in 2017.

With New Brunswick’s mining industry expected do well over the next two years, as both metal and nonmetallic mining were expected to ramp up production, its real GDP was poised to advance by 1.7% in 2015 and 1.6% in 2016, before picking up speed in 2017.