BMO Economics: Shipbuilding Contract the Key to Strong Nova Scotia
- Shipbuilding activity to support medium-term growth
- Output from Deep Panuke and Sable to support growth late in the
- Real GDP growth of 1.8 per cent expected in 2013 (Canada's expected
to be 1.7 per cent)
HALIFAX, NOVA SCOTIA -- (Marketwire) -- 01/17/13 -- Economic growth
in Nova Scotia is poised to pick up over the medium term, with the
Federal shipbuilding contract boosting activity for years to come,
according to the Provincial Monitor report released today by BMO
Economics. Growth is expected to be 1.8 per cent in 2013.
"The contract landed by Irving Shipbuilding to build combat ships for
the Royal Canadian Navy is worth an estimated $25 billion through
2030, and some activity is assumed to get underway in 2013," said
Robert Kavcic, Senior Economist, BMO Capital Markets. "While clearly
positive for the Nova Scotia economy, the massive project is not
without challenges. Among these is the availability of skilled
labour, some of which has already migrated to more lucrative labour
markets in Western Canada."
Other major projects in the province have faced some issues recently;
Encana's Deep Panuke natural gas project is now not expected to begin
producing until later in 2013, while output at Sable was tripped up
by unexpected downtime in 2012. That said, output in late-2013 and
into 2014 should be supportive of growth. Meantime, a deal between
the Province and Pacific West Commercial Corp. will keep production
rolling at the Port Hawkesbury paper mill, and auto-related exporters
will benefit from strong U.S. auto sales, which hit the highest level
in almost 5 years in late 2012.
"Our commercial clients throughout Nova Scotia are confident and
making important investments in new equipment, in expanding their
operations and in hiring people," said Carolyn Booth, Senior Vice
President, Atlantic Provinces, BMO Bank of Montreal. "With the strong
loonie, availability of credit, and favourable interest rate
environment, now is an excellent time to make investments that will
strengthen their productivity over the long term."
The labour market has been steady in recent months. "Employment
growth was decent 0.7 per cent in 2012; strong private-sector job
growth of 2.7 per cent has outweighed lower public-sector payrolls,"
stated Mr. Kavcic. "The jobless rate sat at 9.3 per cent in December,
but should drift down in the year ahead."
The Province of Nova Scotia revised its deficit forecast to $277
million in fiscal 2012-2013, or 0.7 per cent of GDP, from $211
million projected in the budget. Total revenues were reduced by $90
million (1.0 per cent) to $9.2 billion, mainly reflecting lower
personal income tax receipts, with personal income expected to run
about $500 million below the budget forecast. At this point, there's
no indication that the Province will not balance the budget next
fiscal year as planned.
The full Provincial Monitor can be downloaded at
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $525 billion as at October 31, 2012, and more
than 46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
Valerie Doucet, Montreal
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