Economic Outlook 2012
Economic Outlook 2012
Economic Outlook for 2012 is Just Fine, Thanks
Listening to the radio these past few weeks, I continue to hear journalists paint an ever-increasingly dour picture of the global economy. While pessimism can bring about the pleasant surprise of actual survival (or perhaps the horror of it), research into the numbers here at Tenato shows that economic predictions here in Canada are actually pretty solid. So we thought we’d give you the snapshot.
Overall, economists are predicting that Canada’s economy (as measured by real GDP) will rise by 1.5%– 2.5% in the coming year, and that oil prices are going to continue to rise with the uncertainty in the Middle East, and growing Asian demand. This is a heck of a lot better than in the past couple of years; take a look at the following pattern:
The uptick that you see at the end of 2010 is the biggest we’ve seen in almost 20 years, so it can’t be all that bad. In fact, anything above 2% is a lot better than the kick in the face that occurred in 2009, and as Canadians, we’re still standing.
With this in mind, I should point out that research shows the growth pattern across Canada is not going to be even; some provinces will grow more than others, as is always the case. As you can see in this chart forecasted by Statistics Canada and RBC Economics, the amount of growth achieved is forecasted at 1.5 to 4.2 percent.
Despite the old jokes in Alberta about our closest prairie neighbours running here to find work, Saskatchewan will actually lead the nation with 4.2% in real GDP growth in 2012. Not only is Saskatchewan’s energy sector growing strong, but a large potash facility in MooseJaw is in the works, along with solid growth in construction expected from influx of population.
Close on Saskatchewan’s heels is Alberta at 3.9%, which continues to be buoyed by oilsands mega-projects such as Kearl Lake, Surmont and Sunrise. Manitoba is expecting growth of 3.2% in 2012 due to the Bakken oil formation in the SW corner of the province, along with a major airport upgrade and construction of a power generation facility.
Enjoying an energy-driven boost is Newfoundland, as the small coastal province benefits from the digestion of a large meal called Hibernia, an off-shore oil platform with 704 million barrels of recoverable oil, which has turned Newfoundland into a serious “have” province.
In the middle of the growth road is BC, with growth expected at 2.2% for 2012 (and more recent reports downgraded to 1.7%). BC enjoys a solid energy sector, but its economy will be negatively affected by reductions in exports such as coal and lumber due to the European debt crisis, and a drop in retail sales.
On the slower end of Canada’s growth scale we see most of the central and eastern end of Canada. The automotive manufacturing sector in Ontario will recover at a pace that mirrors that of US economy 2012, at 2.0% for 2012.
Meanwhile, Quebec’s mixed economy of tourism, manufacturing, and service sectors may fall behind the pace as its provincial government tries to rein in spending and balance the budget. 2012 growth is predicted at only 1.8%, but new aluminum investments should improve the outlook in 2013, according to economists.
New Brunswick, PEI and Nova Scotia will grow at a slightly slower pace, as exports of agricultural products (potatoes, seafood) and refined gasoline (from Irving in New Brunswick) await the US recovery. 2012 GDP growth of these provinces ranges from 1.7% to 1.9%.
In the big picture of Canada’s economy, one has to remember that GDP is simply a sum total of everyone’s contribution to the financial growth of this country. Many businesses will shrink, and the ones that grow can certainly do so at a far faster pace than 2% if they so choose. After all, it’s a free country, and that means your organization can certainly achieve whatever growth target you truly work to achieve. That alone should give anyone cause to be optimistic.
What is your organization predicting in the coming year? We’d love to hear your thoughts and forecasts. Feel free to comment or get in touch with us, at (403) 242-1127.
Jacqueline Drew, BComm, MBA
CEO & Principal Consultant