Atlantic Canada’s 2016 Economic Growth Modest, So Far: APEC Report
HALIFAX –Most Atlantic provinces showed modest economic improvement for the first part of 2016 according to the latest issue of Atlantic Currents, a publication by the Atlantic Provinces Economic Council (APEC).
The labour market remained weak across the region with employment declining by one per cent in the first four months of the year.
The region’s retail sales, however, shot up by over seven per cent in the first quarter, led by increased sales of autos, building supplies, clothing and furniture. Fred Bergman, APEC senior policy analyst, says this is partly due to the slowly growing average weekly wages.
“In general, over the last decade, retail sales have been growing slightly stronger than average weekly wages, but generally, the two have been trending upward in the similar fashion. The New Brunswick provincial report shows there’s been some support from average weekly wages,” he said.
Bergman said another reason for increase in retail sales over the last year is the savings that came with lower energy prices.
“We think households are spending some of those ongoing savings. So retail sales have been fairly strong in the three Maritime provinces, but quite as strong in Newfoundland and Labrador.”
Although there was a mild rebound in energy prices in the first quarter of 2016, oil and fuel prices remained below that of years prior, resulting in a 35 per cent decrease in the region’s energy exports over the same period. The Maritimes reported a eight per cent increase in non-energy exports, due in part to the low Canadian dollar.
Atlantic Currents also examined the tough decision faced by Newfoundland and Labrador on whether to proceed with the Muskrat Falls hydroelectric project. The project would be the third-largest current investment project in Atlantic Canada, which is expected to produce electricity for both their province, as well as Nova Scotia, with transmission through New Brunswick to New England.
Following a number of delays and cost increases, the government of Newfoundland and Labrador is now reviewing the project and must decide whether to cancel, delay or proceed.
“It’s clear the economics of the project today are different from when the project got a go-ahead in 2012. The costs of alternatives have gone down a lot and the costs of the project has gone up relative to the estimates we saw in 2012,”said Finn Poschmann, APEC’s president and CEO. “It’s no secret to anyone that the review the government has asked for will confirm the costs are higher than expected and that the first power will be delivered later than expected.”
But Poschmann said whether the province decides to go ahead with the project, delay it, or scrap it, each option comes with its own set of costs.
“What the government will be confronting is a pretty cold financial decision,” he said. “Does carrying on with the project from they are make financial sense? This is one of those cases of where what you spent to date, in fact, doesn’t matter. The question is, does it make sense from where you are now to go ahead with the project, delay it, or to cancel it.”