A 'surge' in diamond mining production is expected to contribute to a 4.8 per cent rise in the N.W.T.'s GDP this year, according to the Conference Board of Canada. (CBC)

Canada's territories have bright economic outlooks ahead, thanks to a rebounding demand for diamonds, gold and other minerals, according to the latest forecast from the Conference Board of Canada.

In a forecast report released Tuesday, the economic think-tank said Nunavut, the Northwest Territories and Yukon will "post strong economic growth this year" as global economies recover from the recession and the demand for mineral commodities bounces back.

In the Northwest Territories, which is home to three diamond mines, the forecast calls for a 4.8 per cent growth in the territory's real gross domestic product (GDP) this year due to a "surge" in diamond mining production.

"If we put this in perspective it's strong growth, because for Canada we're forecasting the economy to rebound by 3.6 per cent, so 4.8 per cent is very good," Marie-Christine Bernard, an associate director with the Conference Board, told CBC News.

"The recovery in the diamond industry will span over the next two years. We see the recovery in the U.S. is slowly coming back, so I think that we could see more diamond production in 2011 as well."

The global market for diamonds waned during the recession, as consumers spent less on luxury goods, but the Conference Board report says diamond prices are now approaching pre-recession levels.

At the same time, the report predicts that the N.W.T. unemployment rate will remain around seven per cent over the next three years.

Nunavut mine pushes growth

Mining is also the driving force behind a positive outlook in Nunavut, where its GDP is expected to rise by 12.9 per cent this year, making up for the 10.6 per cent decline it reported last year.

Workers at Agnico-Eagle's Meadowbank mine touch the first gold bar to be produced at the facility in March. (Bill Braden)

Conference Board economist Chris Shaw credits Agnico-Eagle's Meadowbank gold mine, which began commercial production this spring in the territory's Kivalliq region, for reviving Nunavut's mining industry.

Shaw said the mine "will be a boon for the territory not just this year, but into the future."

"Employment is actually expected to grow overall quite high this year," he added. "Mining employment is expected to go up from about 200 to 400 people."

Shaw said the ripple effect of mining sector spending can be significant, since the employees' wages will circulate throughout the general economy.

The report says Nunavut's large public administration sector will stabilize the territory's economy over the next few years.

2 Yukon mines to open

Meanwhile, the Conference Board says the growing demand for metals, and the opening of two Yukon mines, will be part of a "robust economic expansion" in the territory this year.

Yukon is already home to Capstone Mining Corp.'s Minto copper mine, and it could be joined later this year by Alexco Resource Corp.'s Bellekeno silver mine and Yukon Zinc's Wolverine mine.

Mineral exploration spending has been high in Yukon for a number of years, making it one of North America's economic "bright spots" in 2009, according to the report.

The Conference Board is forecasting the territory's GDP to rise by 4.9 per cent this year. Meanwhile, some Yukoners say the economy there will continue to grow over the next couple of years.

"From all indications, it's going to go for a little while yet," said Martin Loos, owner of Quantum Machine Works, which sells diamond-drilling components in Whitehorse.

"I personally think it will be a couple more years just with the price of gold," Loos added. "Gold is what they're after, gold and base metals."