Saskatchewan's economic growth to be impacted by moderating construction
spending: RBC Economics
TORONTO, March 19, 2013 /CNW/ - Weaker-than-anticipated construction spending
intentions for 2013 have prompted RBC to downgrade Saskatchewan's real GDP
forecast from 3.5 per cent to 2.9 per cent, according to the latest RBC
Economics Provincial Outlook released today. The provincial economy will,
however, benefit from a modest uptick in agricultural output, and an expected
recovery in mining activity.
Statistics Canada's recently released Public and Private Investment survey
indicated that capital spending intentions in Saskatchewan for 2013 are
disappointing; spending is expected to grow by only two per cent, down from
6.5 per cent in 2012 and 11.9 per cent in 2011.
The RBC report indicates that, in part, this pullback likely reflected
increased caution from potash producers in the face of decreased demand in the
past year. As a result, RBC expects overall construction spending to remain
modest in 2013, rising only one per cent following an expected 4.5 per cent
rise in 2012.
"A slump in potash sales last year led to increased inventories in the
province; however, some large sales agreements have been reached early this
year with key overseas customers," stated Craig Wright, senior vice-president
and chief economist, RBC. "Stronger demand overseas, along with increased
demand from U.S. producers who are looking to aggressively recover from the
disastrous drought-ravaged 2012 harvest in the mid-west, should rekindle
demand and production of potash in Saskatchewan this year."
Higher demand for potash is expected to drive mining output between 4.5 per
cent and five per cent higher this year and next, up from an estimated two per
cent gain in 2012. Growth in this sector will also be helped by increased
production and demand for uranium.
"We anticipate that strength in mining activity will provide a greater lift to
construction spending in 2014, which will be the main factor behind the
projected further increase in GDP growth to 3.6 per cent next year," said
The RBC forecast also assumes some modest strengthening in agricultural output
in 2013 relative to 2012. However, this is predicated on the assumption that
heavy winter snowfall and risk of flooding does not materially delay spring
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales, housing
starts and consumer price indices. The full report and provincial details are
available online of 8 a.m. ET today at
Craig Wright, RBC Economics Research, 416 974-7457 Paul Ferley, RBC Economics
Research, 416 974-7231 Elyse Lalonde, Corporate Communications, RBC Capital
Markets, 416 842-5635
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-0- Mar/19/2013 09:00 GMT
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