Fiscal forecasts

At first glance, it’s good news. On Tuesday, the Conference Board of Canada forecast that the St. John’s economy will rebound this year. The board — an independent, not-for-profit applied research organization — is predicting 2.5 per cent growth in gross domestic product (GDP) in 2018 and 3.9 per cent in 2019, after contractions in two of the past three years.

“The St. John’s economy has struggled in recent years, but it is poised to be a growth leader in 2018 thanks to increased offshore oil production,” said Alan Arcand, the board’s associate director of the Centre for Municipal Studies, in a news release.

St. John’s will be a “growth leader” compared to Halifax, Moncton and Saint John — cities expected to experience GDP growth below two per cent.

Other growth leaders across the country are Vancouver and Abbotsford-mission in British Columbia.

The main driver behind the rebound anticipated for St. John’s, according to the Conference Board, is the start of production in the Hebron oilfield. It also notes the city’s resources and utilities sector is poised to grow an average of 11 per cent over the next two years.

It’s all great stuff, but as the board’s report continued, its forecast got a little less rosy.

The board is predicting contractions in other areas of St. John’s economy, including construction and some services sectors.

And, perhaps most importantly, employment is expected to decline — for the third time in four years.

So while provincial coffers will likely be a little fuller due to increased oil production, there’ll be fewer people working in the St. John’s area. It points to an ongoing, age-old problem in St. John’s and across the province — economic diversity.

Our economy continues to be fuelled by crude, the same as when, for centuries, our fortunes went whichever way the price of fish did.

The provincial government, however, sees it a little differently.

Tuesday’s throne speech struck some notes of optimism, noting that “the economy of Newfoundland and Labrador is being driven by an innovative and export-focused business community. In a world where location is not a limitation for developing new business ideas, we are growing a diversified economy where entrepreneurship and innovation are flourishing.”

In the speech, the province also alluded to plans — many already announced — to expand the economy by stimulating the technology sector, as well as oil and gas, the fishery, mining, immigration and tourism.

There’s no doubt innovation is happening and there are exciting pockets of growth, but that doesn’t seem to be powering economic results, at least not yet, according to the Conference Board of Canada predictions.

Of course, the board’s numbers are just an informed forecast.

Perhaps it’ll be wrong about the contraction in some industries and the employment stats. Here’s hoping they got the Hebron-led GDP growth right.

After the past few years, it sure would be nice to be a growth leader.