Authors: Owen Jung & Jacques Marcil
All over the world, economists are thumbing their thesauruses looking for negative-sounding words. Not so long ago, nobody dared use the “R” word. You know, the one that sounds like “recession.” Oops. Oh well, no one cares anymore.
What has been dubbed a “synchronous global recession” is now affecting all of Canada’s regions, with an especially strong impact on our exports. As job layoffs and uncertainty spread across the country, it is hard to believe how good things have been in Saskatchewan recently.
In 2008, Saskatchewan’s real GDP grew by an estimated 3.1% and there is a clear consensus that Saskatchewan was Canada’s top performing province. The principal factors behind this growth include solid commodity exports, strong population and income growth, and healthy domestic spending. Clearly, 2008 was a year where the right “mix” of growth was in place.
In 2009, the recession will get deeper and Saskatchewan’s economic growth is not likely to maintain its pace of 2008; however, it should remain ahead of the Canadian pack. Energy and crop prices were high for only the first half of 2008, and could be soft throughout 2009. On the other hand, the high potash prices of 2008 are likely to remain strong in 2009.
Things were so good in 2008 that the government used its most recent budget to clear its tax policy backlog well ahead of the next election while still balancing its books. This is one of many areas where Saskatchewan seems to be immune to the travails of the outside world.
The Saskatchewan outlook for 2009 hangs on potash. Is the “pink gold” strong enough to carry the load of the province’s aspirations in 2009? If the answer is yes, Saskatchewan’s economy will grow and might be the only one to do so in the country. If the answer is no, Saskatchewan’s economy will decline, but much less steeply than what the other provinces will go through.
There is a consensus that growth in export-oriented Saskatchewan will slow in 2009 as a result of the global downturn. Our opinion is that the slowdown will happen but not result in an economic decline. Thanks to potash exports, Saskatchewan will remain the top-performing province in the country and post real growth, but less than in 2008. The rest of Canada is slowly getting used to the idea of being led by such a low-key, unassuming champion. For Saskatchewanians, the trauma associated with suddenly becoming the engine of national growth is already a thing of the past. The Canada West Foundation is forecasting that Saskatchewan’s real GDP growth will be 0.7% for 2009.