The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Editor: Last week, Statistics Canada treated us with new data that, realistically, only economists could possibly be excited about: Provincial and Territorial Economic Accounts for 2004. Despite the rather dull sounding name, the data contained in this report reveal some very interesting trends related to the patterns of economic growth in Canada. With remarkable consistency, real economic growth by province in 2004 increased as you move west across the country. Canada as a whole grew by 2.8% (in real, inflation-adjusted terms) last year - not a bad rate of growth given the soaring value of the Canadian dollar and the downturn in manufacturing. Ontario managed growth of 2.6% - slightly below the national average. Manitoba - hit hard by a weakened agriculture sector and a high Canadian dollar - had the slowest growth in western Canada at only 2.3%, placing it sixth among the ten provinces. But as you move west across the Prairies, things really pick up. Saskatchewan comes in at third in the country with growth of 3.5%. Alberta placed second with growth of 3.7%. And the fastest-growing province in 2004: British Columbia, which expanded by a whopping 3.9%. The 1-2-3 punch for provincial growth in Canada took place in the three western-most provinces. What is happening the in the West that has led to such stellar economic performances? Two words: natural resources. Last year was akin to the aligning of the planets as prices for almost all natural resources (oil, natural gas, forestry products, coal, potash, base metals, and to a lesser degree, grains and oilseeds) all fetched high prices. Manufacturers in the rest of the country faltered, but in Saskatchewan and Alberta they flourished in 2004 due to the soaring oil and gas sector. Steel pipe, boilers, heavy equipment for use in the oil sands, and refined petroleum products all enjoyed a very positive environment in 2004 because of high energy prices and oil patch activity. Saskatchewan manufacturers posted the strongest growth they have seen in a decade with expansion of 11.5%. In spite of the ongoing softwood lumber trade dispute with the US, the forestry sector in British Columbia had a great year in 2004, with a 15% increase in both forestry and sawmill operations in the province. Of course, all of these annual economic growth rates (BC, 3.9%; AB, 3.7%: SK, 3.5%; MB, 2.3%) are in real dollar terms - that is, they are adjusted for price changes. Adjusting for inflation and fluctuating prices when doing year-over-year comparisons is important to get a good read on overall growth trends. There are some rather dramatic results that came out of last week's release. Alberta's current-price GDP last year soared to $187 billion - nearly 20% larger than the $156 billion economy of British Columbia (which has a third larger population). This is, of course, due almost entirely to the burgeoning oil and gas sector. Alberta's GDP is also catching up to the second-largest province in Canada - Quebec. In 2000, Alberta's GDP was about 64% the size of Quebec's. Last year, Alberta's economy was 70% the size of Quebec's. A decade ago, Alberta's economy made up 11.8% of the national economy (in current price terms). Last year, this percent soared to 14.5%. Similarly, 10 years ago the four western provinces together comprised 31.1% of the national economy; last year the figure was 32.8%. Also interesting is the size of Saskatchewan's economy. Last year, it clocked in at $40.456 billion, just a hair larger than its Prairie neighbour to the east, Manitoba ($40.265 billion). This marks the first time in recent history where Saskatchewan's economy was actually larger in current price terms than Manitoba's. Again, the riches of crude oil are largely to thank. The numbers tell a compelling story of economic growth shifting west across the country. Of course, the provincial governments in these fast-growing western regions like to take the credit. And to the extent that debt repayment, balanced budgets, and sensible taxation policies have been followed, some credit is due. But the real thanks for the growth remains solidly with the world prices for natural resources. - Todd Hirsch Chief Economist, Canada West Foundation The Canada West Foundation is an independent, non-partisan, non-profit public policy research institute dedicated to introducing western perspectives into current Canadian policy debates.
