By R. Bruce Striegler
The Conference Board of Canada’s summer 2014 provincial outlook indicates that Nova Scotia’s economy is showing impressive growth potential for 2015. Not surprisingly, the report says that Alberta will continue to outpace the rest of Canada, but after three years of struggle, predictions are that Nova Scotia’s economy will expand by 2.5 per cent. The Conference Board suggests this growth will come from increased production of natural gas from Encana’s Deep Panuke offshore field, and increases in both manufacturing and the service sectors.
In its analysis, the Board notes that Irving Shipbuilding is spending $300 million to upgrade the Halifax Shipyard in order to begin the multi-decade, $25 billion contract to build ships for the navy. At the same time, the resumption of production at Port Hawkesbury Paper and demand for Nova Scotia farm and fish products increased exports 10.1 per cent in 2013. The Conference Board’s projection mirrors the Nova Scotia Department of Finance, who reported in April that their 2014 projections for real GDP growth this year will increase by 1.4 per cent and accelerate to 2.1 per cent in 2015. The province says, “In recent years, the Nova Scotia economy has experienced slower growth than its long-run average as significant shocks to the forest sector and slower government spending weighed on economic expansion. These factors compound existing demographic conditions and slow global economic recovery.”
The provincial government overview suggests that in the medium term, Nova Scotia’s economic outlook will be largely determined by the pace and scale of major projects such as the National Shipbuilding Procurement Strategy, assumed to start major expenditures in late 2015. Other significant developments include Emera’s Maritime Link to Lower Churchill hydroelectric power, wind energy developments, the MacDonald Bridge re-decking, offshore energy exploration and the completion of the Halifax convention centre. “The ability of the provincial economy to respond to these major project investments depends on the extent to which the work is performed by local firms and the capacity of the labour force to undertake them,” says the province’s finance department.
Nova Scotia’s economic growth is projected to accelerate over the time during which these major projects unfold. The province’s report cautions that this depends on the medium-term demographic assumption that net out-migration trends reverse (or are offset by immigration). They note that without a sufficient labour supply to meet major project needs, the impact of these projects may be different than anticipated in its outlook. “This demographically-driven barrier may be overcome through capital accumulation, resource development, trade and productivity, but this requires changes to business practices by Nova Scotia firms.”