Economists agree that 2015 was not a banner year for Nova Scotia’s economy. Next year, they predict, will be better. Just how much better, however, is being hotly debated.

The Atlantic Provinces Economic Council (APEC) believes that a drop in natural gas output will keep the province’s real gross domestic product (GDP) growth to 0.5% for 2015, but “a robust gain” in major project investment and the $25- billion Irving Shipbuilding project should push GDP growth to 1.5% this year.

The Ottawa-based Conference Board of Canada‘s report is more optimistic, looking both backward and forward. The board predicts GDP growth of 1.3% in 2015, but a stronger recovery – 2.5% – for 2016.

Royal Bank of Canada (RBC) has staked out the middle ground. “We expect Nova Scotia’s real GDP to grow by 1.8% in 2016, compared with 2.2% growth for Canada as a whole,” says Gerard Walsh, an economist with RBC in Toronto. “Nova Scotia, like the rest of Atlantic Canada, tends to grow more slowly than the country as a whole, thanks in part to weaker demographics.”

The demographic situation in Nova Scotia is dire. Over the next two and a half decades, the population is projected to drop by 22,000 people. Of those remaining, roughly 29% will be over the age of 65, compared with 18.3% currently. Having fewer young people and more seniors significantly stresses the economy.

“We invest heavily in youth and then they tend to leave just as they are entering the productive part of their tax-paying life,” notes Paul Jacob, an economist and policy analyst with the Halifax Partnership, an economic development group. “This puts fiscal pressure on the province, which will become more of a problem as the population ages and requires higher health-care costs.”

The province is struggling to keep its house in financial order. At present, the debt load is more than $15.1 billion, an all-time high. In December, Finance Minister Randy Delorey unveiled new deficit numbers. The province now predicts a deficit of $241 million, more than double the $97.5-million forecast in last spring’s budget.

Attempts to transform the red ink to black will have a direct impact on the economy, says Walsh: “The government will be a drag as it grapples with a budget deficit and looks to contain public-sector wage growth, which will impede consumer spending. Moreover, while construction will add to growth in 2016, it will likely decline thereafter as big developments wrap up,” he adds. “Our growth forecast for 2017 is 1.3%, which is well below our 2.7% call for Canada.”

One of the bright economic lights remains the 30-year Irving Shipbuilding contract, which will ramp up in 2016. The Halifax Partnership predicts 11,500 jobs will be created at the project’s peak and $250 million in property taxes will be collected.

Exports are doing well, led by gains in seafood and the tire trade. The RBC report states: “We expect non-energy exports to grow further in 2016, as solid external demand and the low value of the Canadian dollar remain supportive factors.”

NOVA SCOTIA

Population: 943,498

GDP, 2014 ($bil.): 39.1

GDP, % change: 1.3

2015-16 deficit ($mil.):241

Estimated net debt ($bil.): 15.1

per capita wage growth, % change, 2014-15: 2.9

Household disposable income, Per capita: $29,114

Figures from latest available reports/estimates

Sources: Conference Board of Canada; Province

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