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BUDGET 2017: Economic indicators and government optimism at odds

The media kit for Budget 2017.
The media kit for Budget 2017.

The provincial budget brought down today by Finance Minister Cathy Bennett conveyed confidence in the future of Newfoundland and Labrador’s offshore oil industry and other sectors of the economy.

But, even with the government’s revised estimated deficit of $1.1 billion, down from the previously projected $1.83 billion, the government’s own documents raise concern in several areas of the economy including the clewing up of major projects and an aging and declining population.

In fact, many of the provincial economic indicators are in stark contrast to the government’s positive message.

The unemployment rate is projected to climb steadily, expected to be at 17.2 per cent by 2021. That will be a 3.8 per cent increase from 2016.

The province’s population is also expected to fall. By 2021, the population is forecasted to have fallen by 2.5 per cent, steadily decreasing each year from 2017 onward. 

The population change is a major issue. As a result of an aging workforce, the province will see fewer people working as more people retire. Between 2015 and 2016 alone, the province saw the amount of seniors in the province jump by 3,788 people while the workforce decreased by 0.8 per cent.

As of 2016’s census numbers, Newfoundland and Labrador’s median age was 45.3 years, up from 2015’s 45 years median. Natural population growth has been declining for several years due to relatively low fertility rates and the aging population.

Newfoundland and Labrador has the highest median age in the country.

Oil is forecasted at $56 US per barrel and the exchange rate with the United States is estimated at $0.75. The government says that both forecasts are cautious estimates.

Bennett stated that the economy has faced challenges dealing with the fluctuating price of oil and several projects moving from the developmental to production stage.

She continued on to highlight the government’s optimism about the future of the offshore oil, as well as the fishery, mining, lumber and tourism industries.

The economy is expected to see a decline in private capital investment, the result of several major construction projects winding down, such as Hebron and Muskrat Falls.

Bennett says that they’ve seen an increase across several economic indicators but that the figures are nowhere where they government would like them to be.

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