Saskatchewan's economy will contract by 2.6% in 2009, but will bounce back with 3.7% growth in 2010, which is the second-highest among the provinces, according to the latest forecast by the Conference Board of Canada. The only caveat is that the main cause of this year's recession, plunging potash production, may not recover sufficiently to turn the economy around next year, the Ottawa-based economic forecaster said.
"There are signs that (potash) demand is going to pick up, but it's very tentative," said Marie-Christine Bernard, an economist with the Conference Board and author of the provincial outlook. "Depending on when there's rebound and the extent of the rebound, we might see some weaker growth in Saskatchewan (in 2010)," she said.
With a strong rebound in potash production, Saskatchewan's economy will grow faster than any other province in 2010, except British Columbia at 4.2%, the Conference Board said. Finance Minister Rod Gantefoer acknowledged that Saskatchewan is currently experiencing a recession, but noted the Conference Board report shows Saskatchewan in very good shape for next year.
"We are in it now and we're going to come out of it and have some significant growth next year," he told reporters at the legislature.
After being burned by decreasing potash sales that left a huge hole in his spring budget, Gantefoer said the predictions give him some confidence in a rebound in potash sales in 2010.
"You're asking the wrong guy right now, (who's) been waiting for these sales of potash for months now, to say with definitive information that's going to be. But all the forecasters seem to be predicting that there will be growth and there will be sales."
But, NDP finance critic Trent Wotherspoon said this year's contraction makes the economic growth projections for 2010 look better than they actually are.
"Next year, when we go and we see a possible marginal increase, that's in many ways making up for possibly what was lost this year," he said.
Meanwhile, Saskatchewan's exports are forecast to increase by 1% in 2010, after dropping by 29% in 2009, led by the mining and energy sector, according to a provincial export outlook by Export Development Canada (EDC).
"(The sector is) 84% of the province's exports," said Peter Hall, chief economist with EDC. "It's a big part of the overall provincial (economy)."
Exports of crude and petroleum products for this year and next are expected to be depressed, with reduced output of heavy oil offsetting higher production of light crude. The forecast growth in export values of 4% in 2010 will be led by a modest increase in the price of oil.
Potash exports, which have been halved on an annual basis this year, are expected to rebound in 2010 as buyers return to the market. But that rebound is by no means assured.
"Is it all over? In terms of potash production, absolutely not," Hall said.
While EDC remains bullish on the long-term outlook for potash, the short-term outlook is uncertain.
"(2010) is a year of reckoning. The recovery year is in 2011."
The province's second-largest export sector, agrifood -- accounting for one-third of exports -- is expected to decline by 3% in 2010. Lower meat and livestock production, combined with a weaker crop this fall, is expected to constrain total export growth to only 1% next year.
Canadian exports are forecast to contract 23% in 2009, before rebounding 6% in 2010, EDC said.
Saskatchewan's economy will contract by 2.6% in 2009, but will bounce back with 3.7% growth in 2010, which is the second-highest among the provinces, according to the latest forecast by the Conference Board of Canada. The only caveat is that the main cause of this year's recession, plunging potash production, may not recover sufficiently to turn the economy around next year, the Ottawa-based economic forecaster said.
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