Sask. looking at 2.9% growth in 2013

A stronger mining sector will drive Saskatchewan’s economy to 2.9 per cent growth this year — good for third place among the provinces — and 3.4 per cent in 2014 for a second-place finish behind Alberta, the latest provincial outlook from RBC Economics released Wednesday predicts.

“We expect the potash rebound to boost mining output by 4.5 per cent this year and five per cent next (year) after growth of only one per cent in 2012,” Craig Wright, senior vice-president and chief economist for RBC, said.

Last year, RBC’s forecast for the province’s economic growth steadily lowered to 2.4 per cent as demand for potash — and consequently production — softened largely due to weak overseas markets.

However, with multi-year sales agreements signed late last year and early this year with a number of key overseas purchasers, demand has started to pick up. In fact, potash production for the first quarter of 2013 is up an impressive 26 per cent over year-ago levels, the report said.

Last winter’s record snowfall sparked concerns that agricultural production would be hindered by potential spring flooding, the RBC report said.

By mid-June, however, Saskatchewan farmers had caught up with and surpassed the five-year average for seeding completion.

“We project a relatively stable three per cent growth for Saskatchewan’s agricultural sector both this year and next, assuming that normal growing conditions prevail in the fall,” Wright said.

Like the Canada Mortgage and Housing Corp., RBC expects that housing starts will weaken from 10,000 units last year to 7,900 units this year and 6,900 units next year. This weakness, however, will be offset by strength in nonresidential construction, such as ongoing spending on the $4.1-billion K+S Legacy potash mine.

Overall, RBC assumes growth in construction spending this year will be relatively modest at 1.5 per cent.