N.S. Economy Will Slow This Year Thanks to Northern Pulp Shutdown
Growth across Nova Scotia’s economy will slow significantly this year as a direct result of Northern Pulp’s closure.
The province’s 2020-2021 budget predicts Nova Scotia’s GDP will grow by just 0.4 percent this year, after shooting up by 1.9 percent in 2019.
Up until Northern Pulp shut down it had been a great few years for the province’s economy. Nova Scotia’s population was surging, there was more new construction, and wages were going up.
In 2019 there were more new jobs in Nova Scotia than at any time in the past 15 years. Unemployment was at its lowest point since the 1970s, and provincial exports were growing steadily.
“I am hopeful and optimistic about the future of our province,” Finance Minister Karen Casey said as she introduced the budget on February 25, citing the province’s “stronger economy” and “positive fiscal position.”
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But the provincial budget says those positive trends will change this year as the Northern Pulp mill remains shuttered. While the province’s economy will still grow in 2020, that growth will be much smaller than it has been in previous years.
Take salaries, for example.
In 2019, wages across the entire province went up by 3.9 percent. This year, the province is predicting they will rise by 2.2 percent.
The same is true for how much money Nova Scotians spent on houses. In 2019, “residential investment” was up a full 12.9 percent. In 2020, that number will probably be closer to 2.6 percent.
Some measures of economic health are even less rosy.
The province says international exports will likely go down this year. Northern Pulp’s exports of wood pulp were worth $214-million in 2019. With the mill closed this year, that number will be zero.
It also meant a loss of $32 million in tax revenue for the province, mostly in the form of lost income tax and HST.
Tim Houston, the head of the Progressive Conservative party and official opposition leader, told reporters yesterday the province’s economic outlook is troubling.
“The economy could easily contract this year,” he said. “When you think of the risks on the horizon with the coronavirus, when you think of the potential impact of the [rail] blockades, the impact of Northern Pulp… there is huge headwinds before this province.”
“Our economy could easily shrink this year, and that’s a concern,” he added.
Economic predictions always come with some uncertainty, but the provincial government isn’t predicting a full-on shrinking economy.
In fact, it believes economic growth will strengthen after a tough 2020 — although it probably won’t get all the way back to the red-hot level of 2019.
Nova Scotia’s GDP, for example, will go up 1.2 percent in 2021, one percent in 2022, and 1.2 percent in 2023.
That return to stronger economic growth will be spurred along by a steadily rising provincial population, major shipbuilding contracts, and big infrastructure spending that will create more jobs.
At the Forestry Nova Scotia’s annual general meeting two weeks ago, the general of Northern Pulp says the mill could reopen under the right conditions, but there is no timetable on when that could happen.
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