The wind has gone out of Atlantic Canada’s economic sails and doldrums may lie ahead, although there are a few sunny spots in the region’s outlook.
A key challenge facing the Atlantic provinces is the aging population, a trend that’s hurting the region’s economy.
“For 2017, growth was well below the national average. That’s linked to challenges with demographics,” says Lois Mainville, provincial economist with the Conference Board of Canada’s forecasting and analysis team in Ottawa. “Atlantic Canada’s [residents] are older relative to the rest of the country.”
The burden of having one in three citizens over age 65, as forecast for the East Coast in 20 years, will be extreme. Richard Saillant, director of the Donald J. Savoie Institute at the Université de Moncton in New Brunswick, predicts that universal health care will no longer exist in the province.
Immigration is a counterbalance to an aging population, and Nova Scotia and Prince Edward Island are progressing in that regard. In 2017, Nova Scotia welcomed more than 4,000 newcomers – 1,400 immigrants through the Provincial Nominee Program (the most ever) and almost 200 newcomers and their families through the Atlantic Immigration Pilot, a partnership among the four Atlantic provinces and the federal government to attract skilled labour.
P.E.I. had the biggest population growth of the Atlantic provinces in 2016-17, thanks to an influx of immigrants. For the first time in P.E.I.’s history, the province’s population hit the 150,000 mark.
Statistics Canada’s data show that P.E.I.’s population growth rate from July 2016 to July 2017 was 1.7% compared with the national rate of 1.2%. Roughly 90% of P.E.I.’s new growth is the result of immigration, as more than 2,200 newcomers arrived during this 12-month period. Now, the government’s recent population action plan’s new target is 160,000 people by the end of 2022.
Here’s a closer look at the four Atlantic provinces:
– New Brunswick. The Atlantic Provinces Economic Council (APEC) anticipates that New Brunswick’s economy grew by 1.4% in 2017, thanks in large part to a strong increase in investment and higher exports. In 2018, real gross domestic product (GDP) growth is forecast to decline to 1% as major project investment slows.
The mining industry has some favourable prospects, particularly in zinc production, Mainville says. Late last year, Vancouver-based Trevali Mining Corp. announced it had located “a major body” of zinc at its Caribou Zinc Mine near Bathurst.
– Newfoundland and Labrador. There’s no consensus for how this province will fare economically this year.
The Conference Board predicts smooth sailing ahead: 2.4% real GDP growth, the highest growth rate in the region. APEC, however, is less optimistic, forecasting that real GDP will decline by 0.5% this year.
Both the Conference Board and APEC agree that the economic driver for the province is the $14-billion Hebron offshore oilfield project, operated by St. John’s-based ExxonMobil Canada Ltd., which announced that production is ahead of schedule.
– Nova Scotia. Growth in real GDP is expected to slow in Canada’s most populous East Coast province to 1% in 2018, down slightly from the 1.3% forecast for last year, according to the Conference Board. In part, the end of major projects accounts for this drop, notes Mainville.
APEC predicts investment in major projects will drop by 3% in 2018, due in large part to less offshore exploration spending. Energy exports plummeted by 82% in 2017, and natural gas production dropped by 29%.
The Sable Offshore Energy Project – operated by ExxonMobil Canada for decades – is, literally, running out of gas. In late 2017, the firm began decommissioning the project, which was Canada’s first offshore natural gas development project.
Calgary-based Encana Corp. reportedly is planning to close its Deep Panuke natural gas project. Production began in 2013 and was anticipated to continue for 13 years. However, Encana put out formal calls to plug its five subsea wells and states the project is likely to be capped by 2021.
On the plus side, increased activity on the Arctic and offshore patrol ships at Irving Shipbuilding Inc.’s Halifax shipyard and spending on Halifax-based Emera Inc.’s Maritime Link project will bolster the local economy.
– Prince edward island can expect real GDP growth of 2.4% in 2017, thanks in large part to successful immigration initiatives, according to the Conference Board. This figure is anticipated to dip to 1.9% in 2018, as household spending, tourism and exports are expected to slow down.
As many major projects wind down, APEC anticipates investment in the province will drop by 6% in 2018. The electricity transmission link to New Brunswick, in particular, is complete. However, a $7-million renovation of the former McCain Foods Ltd. plant in Borden-Carleton will inject both revenue and confidence.