The Star Phoenix, July 11, 2013 - Saskatchewan will continue to outperform the national average, with economic growth of two per cent in 2013 and 2.7 per cent and 2014, but the gap between resource-rich provinces and the others is narrowing, according to the latest forecast from Laurentian Bank.
"This situation is likely due to difficult weather conditions and the growing uncertainty with respect to pipeline capacity in Alberta and Saskatchewan. The outlook for these two provinces has been downgraded for 2013, while the one for Quebec and some of the Atlantic provinces has been revised slightly upward," said Laurentian's provincial outlook report released Wednesday.
That said, Saskatchewan will have "economic growth well above the national average" this year and next - albeit slower than the 2.2 per cent growth in 2012 - thanks to slow acceleration by the U.S. economy that will cause the province's exports to rise. However, the agricultural sector could run into some trouble, the Montrealbased bank said.
Seeding intentions for 2013 indicated an increase in wheat areas from 2012 and Saskatchewan is Canada's largest wheat producer, with 50 per cent of the country's output.
Farmers could see the value of their harvest decline this year due to larger crops in North America.
With these conditions in the North American market, the focus on crop yields becomes more important than ever, favouring demand for potash. After last year's pullback, potash production should rebound in 2013, supported by the recent signing of accords with Chinese and Indian buyers.
Uranium extraction should advance in 2013 and jump in 2014, the first full year of operation for the uranium mine in Cigar Lake, one of the world's largest uranium deposits. Demand should be solid from China and India, major uranium consumers, according to the bank's projections.
For the manufacturing sector, the slowdown recorded at the end of 2012 should reverse, as the outlook remains positive for food manufacturing (the largest sub-sector in terms of shipments) and farm equipment manufacturing (the secondlargest sub-sector) due to the recovery south of the border.
The construction sector had a boom year in 2012. In the first quarter of 2013, however, investment in construction fell from the peak reached in the second half of 2012, in both the residential and non-residential sectors.
The contraction that began early this year should continue, particularly in the housing sector. Loosening demand in the resale market in Regina and Saskatoon will limit the number of housing starts.