Province’s economy shrinks by 1.4% in 2015
Construction decline leads way as Sask. economy shrinks 1.4% in 2015
Saskatchewan’s economy shrank by 1.4 per cent in 2015, the thirdworst performance among the provinces, next to Alberta’s four per cent contraction and Newfoundland and Labrador’s 2.2 per cent decline, Statistics Canada said Thursday.
Construction fell 19 per cent as lower oil prices led to a significant drop in oil and gas engineering construction, while other engineering construction declined as new mining capacity came on stream, the federal agency said.
Residential construction declined 15 per cent on weaker demand for housing, and nonresidential building construction decreased 2.6 per cent. Support activities for oil and gas extraction also fell significantly, while oil and gas drilling decreased.
By contrast, mining and quarrying increased 13 per cent with significant gains in potash and uranium mining, StatsCan said.
Despite dry growing conditions, crop production grew 1.7 per cent in 2015. However, drought conditions led to a decline of 19 per cent in livestock production due to difficulties with feed and water supplies.
Manufacturing output decreased 2.8 per cent, as losses in machinery, primary and fabricated metal products, transportation equipment, and chemicals were partly offset by gains in refined petroleum products, food products and wood products.
Lower economic activity contributed to decreases in wholesale and retail trade and truck transportation. Crude oil pipeline transportation rose 7.1 per cent as inventories were reduced, the report said.
“The 1.4 per cent decline was actually smaller than I expected, given the sharp drop in commodity prices,” said Doug Elliott, publisher of Sask Trends Monitor, noting this was the province’s fifth “recession” or economic contraction since 2001.
“The trend line for economic growth over the (15-year-period) is 1.9 per cent, which is barely enough to keep up with the growth in population,’’ Elliott added.
Surprisingly, economic output for the mining and oil and gas sector actually grew in both 2014 and 2015 with increases of 7.7 per cent and 0.5 per cent respectively.
“We are simply measuring the fact that oil, gas, potash, and uranium production did not decline in volume last year,” Elliott said. “The number of new wells being drilled and potash mines being constructed did.”
Robert Kavcic, senior economist with BMO Capital Markets, said the Canadian economy expanded at a slower-than-expected 0.9 per cent last year.
Alberta’s economy contracted 4.0 per cent in 2015, after averaging 4.4 per cent growth per year over the prior three years, with oil and gas support activities and related construction each falling by more than 30 per cent, Kavcic said.
B.C. led the country with three per cent growth, the best pace since 2006. Ontario was also strong, rising 2.5 per cent for a second year, while Quebec grew a more subdued 1.1 per cent. Manitoba picked up 2.3 per cent.
In 2016, Canadian real GDP is forecast to expand by 1.6 per cent, dragged down by previously highflying oil-producing provinces, BMO said.
“Real GDP in Alberta is expected to contract 1.6 per cent this year after a deep four per cent decline in 2015,” Kavcic said.
“Saskatchewan is also feeling the impact, and the economy is expected to expand just 0.5 per cent this year after a 1.4 per cent contraction in 2015.
“This is a stark reversal from the rip-roaring near-four per cent average pace over the prior five years.”