While New Brunswick came through the recession with fewer bumps than some other provinces, mostly due to infusions of cash from the government, economists are forecasting rougher waters ahead due to a pullback in that spending.

Economists predict that the unemployment rate — already high, at more than 9% — could fail to improve by much. As well, the high Canadian dollar could be a drag on the province’s exports, which rely heavily on the U.S. market.

New Bruns-wick had injected $1.6 billion into infrastructure programs in 2009 and 2010. It also had introduced aggressive cuts in personal and corporate taxes, although some economists have suggested that the cuts were poorly timed. Real gross domestic product rose by an estimated 2.4% last year, after falling by 2.2% in 2009. However, real GDP growth this year is estimated to be only 1.8%. Says Pascal Gauthier, senior economist with Toronto-Dominion Bank: “Since we are in the second phase of recovery, the incremental growth rate for this year will be smaller than last year.”

Other forecasters are even gloomier. Bank of Nova Scotia is forecasting that New Brunswick’s real GDP growth will remain flat in 2010 and 2011, and hover around 1.9% by the end of this year.

It’s possible real GDP growth could rise to 2.2% by 2012 if prices of natural gas exports continue to rise, says Alex Koustas, economist with Scotiabank: “Natural resources have come back nicely. If that continues, so will economic growth.”

Thanks to rising oil prices, New Brunswick’s energy exports jumped by 35% for the first seven months of 2010, according to the Halifax-based Atlantic Provinces Economics Council. Other non-energy exports — including potash, lumber and pulp — also rose by 12%, according to Apec.

With U.S. housing starts still deep in the basement and the C$ relatively high against the greenback, New Brunswick’s forestry industry is likely to continue its extended period of decline, due to soft demand for newsprint and building materials.

The outlook for potash is positive, however, partly due to the expansion of New Brunswick’s only mine, owned by Saskatoon-based Potash Corp. of Saskatchewan Inc. Upon the mine’s completion in 2013, production is expected to rise to two million tonnes from its current level of 800,000 tonnes.

The IT sector is also slated for growth. Due to the 2009 tax cut, more firms have set up shop in New Brunswick, says Koustas: “It’s attracting more people to the province’s major urban centres and helping create more [skilled] jobs.” Koustas forecasts that New Brunswick’s unemployment rate will stay at 9.3% for 2011 but drop to 8.7% for 2012 if the province’s IT sector grows. IE