A new report from RBC Economics predicts Newfoundland and Labrador will rebound from sluggish growth this year to lead the Atlantic provinces in 2013.
The report noted that a steep drop - 28.5 per cent - in crude oil production in 2012 due to maintenance shutdowns was a drag on economic growth in the province, which is expected to be 0.7 per cent this year, according to the report.
Growth will be top in Atlantic Provinces.
But with Hibernia returning to full production next year, RBC is predicting 4.4 per cent growth in the province in 2013, topping all Atlantic Provinces.
The report forecasts 2.1 per cent growth for Nova Scotia, 1.8 per cent growth for Prince Edward Island and 1.7 per cent growth in New Brunswick.
“The performance in Newfoundland will reflect almost entirely the huge swing in the oil production,” said Robert Hogue, senior economist with RBC.
“This year, it will be depressed because of downtime in production in some of the offshore platforms. So just the rebound next year will be such that it will cause real GDP growth to really jump.”
Strong mining sector performance
RBC expects 2013 to be stronger in the mining sector as well, with projects under construction advancing towards production.
“There’ll be new output coming from new mines next year,” Hogue said, adding that the report has bumped up the forecast for the province’s GDP growth from previous estimates of about three per cent. “What has been taken out of growth in 2012 has been added to 2013 because of the disruption in oil production.”
The medium-term outlook is also good, said Hogue.
“There’s some big projects out there, Muskrat Falls being one of them, that are being discussed that may lead to sustained growth beyond our forecast horizon here,” he said. “Government’s still talking about getting official sanction for the project, imminently, so we’ll see how it goes.”