Nova Scotia’s economy is “movin’ on up.” Its real gross domestic product (GDP) growth is expected to hit 2% in 2014, according to Mary Webb, senior economist and manager, provincial economics, with Bank of Nova Scotia. Not only is that figure double the projected 1% rise in real GDP in 2013, it also moves the province closer to the middle of the pack in terms of provincial growth.

“While remaining slightly below the national average,” says Laura Cooper, an economist with Royal Bank of Canada in Toronto, “the province’s economy is expected to grow at the sixth-fastest pace in the country in both 2014 and 2015, representing an improvement from its expected eighth-place ranking in 2013.”

Several key initiatives are driving the economic surge. Foremost among them is renewed natural gas production. A full year of production is expected at the Sable Island field, a mature site, and Deep Panuke finally began production this past summer. According to Encana Corp., Deep Panuke now is at daily peak production of 300 million cubic feet of natural gas and has an anticipated production life of 13 years.

“Additionally, offshore exploration activity is picking up, with [BP PLC] and Shell [Canada Ltd.] completing seismic imaging and potentially beginning to drill by 2015,” notes Robert Kavcic, vice president of economic research with BMO Capital Markets Corp. in Toronto.

Beyond oil and gas, Halifax’s shipyard is undergoing a massive upgrade more than two years after the federal government signed a $25-billion contract to build the nation’s next fleet of combat vessels with Irving Shipbuilding Inc.

This deal alone will contribute strongly to the local economy, says Fred Morley, executive vice president and chief economist with economic development group, the Greater Halifax Partnership: “The Irving shipbuilding yard upgrade in Halifax is a $300-million project, with $175 million in contracts having been awarded as of December 2013. Half of the contract’s value has flowed to Nova Scotia firms.”

Webb points out that the shipbuilding deal is valuable in the long term: “What’s important is the length of the contracts. It builds capacity and skills. There are multiple benefits beyond immediate economic growth.”

Other bright economic lights include: the recent approval of the $1.5-billion Maritime Link project, which will bring in hydroelectricity from Labrador, and rubber tires – Nova Scotia’s largest export – which economists anticipate will bounce back, given that U.S. automobile sales are poised to gain momentum in 2014.

Nevertheless, Nova Scotia faces significant challenges on several fronts.

“The prospects for a stronger overall performance during 2014 are being weighed down by deterioration in the province’s labour market,” says Cooper. “Weakness has permeated throughout the private and public sectors, and the province is expected to face an overall pullback in employment in 2013, although a surge in self-employment will temper the decline to a mild 0.2%.”

Labour shortages are likely to affect major initiatives, such as the shipbuilding contract, Kavcic says: “The massive project is not without challenges. Among these is the availability of skilled labour, some of which continues to migrate to more prosperous labour markets in Western Canada. The net outflow of almost 5,900 people in the year, as of 2013’s second quarter, was the largest in more than 50 years.”

Government spending is also an issue. In August 2013, the then New Democratic Party government forecasted a $16-million surplus for the fiscal year. But, in December, the newly elected Liberal government revised this figure to a $481-million deficit. As a result, Finance Minister Diana Whalen says, the Liberals may not be able to keep a campaign promise to reduce the HST to 13% over the next two years.

Nova Scotia

Population: 940,789

GDP 2012 ($bil.): 38.4

GDP % change: +0.7

2013-14 deficit ($mil.): 481

Estimated net debt ($bil.): 14

Median after-tax income, all families: $46,100

Household disposable income/capita: $27,063

Figures are from latest available reports/estimates

Sources: conference board of Canada;

government reports

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