Saskatchewan’s economy was already shrinking before COVID

Numbers suggest province cannot count on post-pandemic boom, economist says

New data from Statistics Canada suggests Saskatchewan was already in a “mild recession” last year, even before COVID-19 and the latest oil shock began pummelling the province.

Saskatchewan’s gross domestic product (GDP), a measure of total economic output, shrunk from $82.2 billion in 2018 to $81.5 billion 2019 after factoring in inflation. That’s a decrease of 0.8 per cent, the worst number of all the provinces. The only other province to see its economy shrink last year was Alberta, which faced a contraction of 0.6 per cent.

Joel Bruneau, head of the economics department at the University of Saskatchewan, said the new data show the province wasn’t even managing to tread water before COVID-19 hit.

“We’ve averaged negative growth over four quarters, so I would call it a mild recession,” he said.

The data show that most of the hit to Saskatchewan in 2019 came from goods-producing industries, rather than the service sector. Industrial production was down, as was mining and quarrying, while the energy sector was basically flat.

Bruneau said the weakness in commodities isn’t being offset by strength anywhere else.

“We just didn’t have the cylinders going to pick up that slack,” he said.

The provincial economy had grown in both 2017 and 2018 after contracting for the two years prior under the weight of low oil prices.

Bruneau said the soft numbers for 2019 suggest the province can’t count on a boom even if the COVID -19 downturn lifts.

“If we were to come out of COVID quickly, we would still be in the soft goods-producing sector,” he said.

Private forecasters are projecting a much steeper hit to Saskatchewan in 2020.

As of late April, TD Bank was forecasting an 8.2 per cent contraction in GDP for the province this year.

Though there is no GDP data available on a provincial level for 2020, employment data is already suggesting how steep the plunge could be this year.

Employment is down by more than 73,000 positions since the beginning of the COVID-19 pandemic.