The State of the North conference hosted by the Northern Policy Institute was held in Timmins from September 27-28 with much of the discussion focusing on reversing the north's economic decline. Charles Cirtwill, President of the Northern Policy Institute sent out the slides of his presentation with an invitation to share and today's post reproduces a few of those slides. Figures 1-2 present some GDP estimates by sector for the Northwest and the Northeast of Ontario while Figures 3-5 present non-residential building permits for assorted northern Ontario districts.
Northern Economist 2.0
Thursday 5 October 2017
Tuesday 3 October 2017
Economic News Around the North: October 3rd Edition
Here are some of the items of economic interest with respect to northern Ontario that have caught my interest over the last little while. There truly is never a dull moment when it comes to the economy of northern Ontario.
White River Benefits from new Harte Gold mine. CBCNews Thunder Bay, October 3rd, 2017.
While being a small resource based community means dire times when the main industry shuts down, the converse is that when a new industry starts up, there can be a boom. White River is getting good economic news.
Porter Airlines sets up a Thunder Bay crew base. TBNewswatch. September 19th, 2017.
This is definitely good news and raises the prospect that Porter may be looking at expanding its service west and south. I would expect to see more flights through Thunder Bay to Winnipeg and perhaps through Chicago Midway to connect with the current Chicago-Toronto run.
Liquid natural gas coming to communities on Lake Superior's north shore. CBCNews Thunder Bay, September 25th, 2017.
And here are two interesting and related items:
Delegates discuss keys to reversing decline. TimminsPress.com, September 28th, 2017.
The State of the North - A New Vision is Emerging. TBNewswatch, September 28th, 2017.
I suppose you can start to smell the prospects of elections coming soon. A provincial election is expected by spring while municipalities will be going to the polls next October. Needless to say, the shopping lists are being put together in the form of strategies and plans designed to reverse the northern Ontario economic decline and to get candidates elected. Such regional studies and strategies have a long history in the north - think back to the 1970s (Design for Development) or the 1980s (Royal Commission on the Northern Environment) or the 2000s (Regional Adjustment Strategy, The Northern Growth Plan, the Rosehart Report). Given the lack of success to date in reversing northern decline, one must admire everyone's faith in grand economic studies and development strategies but then I suppose there is no serious expectation they will reverse anything. Their purpose is simply to put together the wish list for new government spending initiatives designed to continue northern Ontario's palliative economic care. This is not really a new vision at all but rather business as usual.
And in terms of some of the more entertaining economic development strategies being touted:
City signs friendship agreement with Nanning, China. TbNewswatch, Septembner 22nd, 2017.
City makes friends with Nanning, China. The Chronicle Journal, September 23rd, 2017.
Apparently one of the visions discussed was shiploads of vegetables and beef and other agricultural produce from Thunder Bay's port to Nanning. According to one Thunder Bay City Councillor: "There is that kind of potential for our agricultural sector." I assume this meant western Canada's agricultural sector (but then why ship to China through Thunder Bay rather than Vancouver or Prince Rupert) given that Thunder Bay's agricultural sector would be hard pressed to feed 100,000 people locally never mind 7.5 million in Nanning.
Still, its nice to be friends with other cities even if the expectations are a little off kilter.
In other news:
Could more autonomy hurt the North? One expert says yes. Northern Ontario Business. October 2nd, 2017.
Cambrian student population reaches highest total in 10 years. Northern Ontario Business. October 2nd, 2017.
Give First Nations priority access to marijuana industry. Nugget.ca. October 2nd, 2017.
Developing a Smart City important for the economy. Saultstar.com. September 29th, 2017.
And in terms of negative economic impact when a major broader public sector employer shuts down....
Laurentian University strike enters second week, administration says new offer on table. CBCNews Sudbury. October 2nd, 2017.
White River Benefits from new Harte Gold mine. CBCNews Thunder Bay, October 3rd, 2017.
While being a small resource based community means dire times when the main industry shuts down, the converse is that when a new industry starts up, there can be a boom. White River is getting good economic news.
Porter Airlines sets up a Thunder Bay crew base. TBNewswatch. September 19th, 2017.
This is definitely good news and raises the prospect that Porter may be looking at expanding its service west and south. I would expect to see more flights through Thunder Bay to Winnipeg and perhaps through Chicago Midway to connect with the current Chicago-Toronto run.
Liquid natural gas coming to communities on Lake Superior's north shore. CBCNews Thunder Bay, September 25th, 2017.
And here are two interesting and related items:
Delegates discuss keys to reversing decline. TimminsPress.com, September 28th, 2017.
The State of the North - A New Vision is Emerging. TBNewswatch, September 28th, 2017.
I suppose you can start to smell the prospects of elections coming soon. A provincial election is expected by spring while municipalities will be going to the polls next October. Needless to say, the shopping lists are being put together in the form of strategies and plans designed to reverse the northern Ontario economic decline and to get candidates elected. Such regional studies and strategies have a long history in the north - think back to the 1970s (Design for Development) or the 1980s (Royal Commission on the Northern Environment) or the 2000s (Regional Adjustment Strategy, The Northern Growth Plan, the Rosehart Report). Given the lack of success to date in reversing northern decline, one must admire everyone's faith in grand economic studies and development strategies but then I suppose there is no serious expectation they will reverse anything. Their purpose is simply to put together the wish list for new government spending initiatives designed to continue northern Ontario's palliative economic care. This is not really a new vision at all but rather business as usual.
And in terms of some of the more entertaining economic development strategies being touted:
City signs friendship agreement with Nanning, China. TbNewswatch, Septembner 22nd, 2017.
City makes friends with Nanning, China. The Chronicle Journal, September 23rd, 2017.
Apparently one of the visions discussed was shiploads of vegetables and beef and other agricultural produce from Thunder Bay's port to Nanning. According to one Thunder Bay City Councillor: "There is that kind of potential for our agricultural sector." I assume this meant western Canada's agricultural sector (but then why ship to China through Thunder Bay rather than Vancouver or Prince Rupert) given that Thunder Bay's agricultural sector would be hard pressed to feed 100,000 people locally never mind 7.5 million in Nanning.
Still, its nice to be friends with other cities even if the expectations are a little off kilter.
In other news:
Could more autonomy hurt the North? One expert says yes. Northern Ontario Business. October 2nd, 2017.
Cambrian student population reaches highest total in 10 years. Northern Ontario Business. October 2nd, 2017.
Give First Nations priority access to marijuana industry. Nugget.ca. October 2nd, 2017.
Developing a Smart City important for the economy. Saultstar.com. September 29th, 2017.
And in terms of negative economic impact when a major broader public sector employer shuts down....
Laurentian University strike enters second week, administration says new offer on table. CBCNews Sudbury. October 2nd, 2017.
Sunday 1 October 2017
Canada's Economy is Going to Cool Off But How Much is Not "Predetermined"
Focus Economics has just released its October 2017 Consensus
Forecast for Major Economies and the numbers for Canada bear some consideration
in the wake of our recent surge in real GDP growth. Annualized GDP growth in the second Quarter of 2017 for
Canada according to Focus Economics was 3.7 percent – the highest in all the
G7-which averaged 2.2 percent. The
world economy grew at 3.2 percent; the United States came in at only 2.2
percent while Germany managed only 0.8 percent. So, Canada seems to be on a roll.
However, looking ahead at the 3rd and 4th
quarters and into 2018, the GDP growth rates start to come down. Canada’s 3rd quarter of 2017
is forecast at 2.7 percent while the 4th quarter comes in at
2.5. As for 2018, the 1st
quarter is forecast at 2.5 percent, the 2nd at 2.1 and the remaining
quarters at only 2 percent each.
Canada is still expected to outperform the G-7, which by the 4th
quarter of 2018 is expected to see only 1.8 percent average growth. However, the gap between Canada and the
G-7 narrows considerably.
Part of what is going to cool off the Canadian and G-7
economies is the anticipated rise in interest rates. The rate for three month T-bills in Canada was at 0.54% in 1st
quarter of 2017 but is expected to rise to 1.72 percent by the 4th
quarter of 2018. The average for
the G-7 has it going from 0.54% to 1.14% suggesting that rates in Canada are
currently expected to rise faster than other G-7 countries. Over the same period, 10-year bond
yields are expected to rise from 1.63% to 2.56% in Canada and from an average
of 1.48% to 1.91% in the G-7.
Of course, these interest rates are all still quite low by
historical standards but think of them another way. From the 1st quarter of 2017 to the 4th
quarter of 2018, Canadian T-bill rates are expected to undergo an increase from
0.54% to 1.72% - a percent point increase of 1.18 points but a percentage
increase of over 200 percent. In
other words, there is a doubling of debt service costs. Moreover, this increase is greater than
the average for the G-7.
The coming slowdown in Canadian economic growth is going to
be driven by two interest rate effects.
First, the rise in interest rates will affect borrowing and investment
by Canadian consumers and businesses.
Second, Canadian interest rates rising faster than the United States and
other G-7 countries means that all other things given, the Canadian dollar can also be expected to
appreciate relative to other major currencies also affecting our exports.
In the end, much depends on how quickly Canadian interest
rates continue to rise. Stephen
Poloz, the Governor of the Bank of Canada in last week’s address in St. John’s remarked
that there was “No predetermined path for interest rates from here” suggesting
that future rate increase are by no means preordained.
Of course, this introduces a certain amount of variability
into forecasts as well as some uncertainty into the expectations of consumers
and businesses. In the end, what
this also means is that the amount of cooling off the Canadian economy may face
over the next 18 months is also not predetermined.
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