Conference Board slashes Manitoba's 2019 economic growth projection ahead of election
Trade tensions, less robust consumer and government spending weigh down province's economy
The Conference Board of Canada is painting a gloomier picture of Manitoba's economy only weeks before the provincial election.
On Wednesday, the Conference Board slashed its economic growth forecast for the province by two-thirds. It's now predicting real GDP growth of 0.5 per cent this year in place of an earlier projection of 1.6 per cent growth for 2019.
Trade tensions with China, slow growth in consumer spending and reduced infrastructure spending are all weighing on Manitoba, Conference Board director Marie-Christine Bernard wrote in the summer 2019 Provincial Outlook Economic Forecast.
"Disruptions in the agriculture sector's exports due to China's bans on canola and other crop seeds, plus a soft domestic economy, will lead to little growth," Bernard wrote.
"The agriculture sector is particularly vulnerable this year because of the trade dispute with China [over the detention of a top Huawei executive in Vancouver] and because crop development has been subpar."
While China is top of mind, the main reason Manitoba's economy is expected to grow more slowly is a combination of "muted growth in consumer spending," slower growth in provincial spending on programs and actual reductions in spending on infrastructure.
The completion of big-ticket infrastructure projects, such as the Bipole III transmission line and the Keeyask hydro project, and declines in both the oil and mining sectors are also expected to drag down the Manitoba economy, though the Conference Board is predicting a modest rebound next year to 0.8 per cent GDP growth.
Tepid forecast has implications
Brights spots in the provincial economy include "large commercial and residential complexes" under construction in Winnipeg, food-processing plant expansions in Portage la Prairie and the expectation unemployment rates will drop.
The Conference Board also downgraded its economic outlook for most other Canadian provinces. But the tepid forecast has major implications for Manitoba in particular, as it will become more difficult for the province to meet its deficit-reduction targets and for any political party to promise economic gains.
The province is banking on cutting the deficit to $360 million for the 2019-20 fiscal year, based on GDP growth projections of 1.7 per cent for 2019 and 1.5 per cent for 2020.
"If there is a downside risk to your GDP growth, there is a downside risk to your revenue growth," said Pedro Antunes, chief economist for the Conference Board of Canada.
"Having said that, I think the province is on a path to look at addressing its fiscal situation. I think we have seen some improvements on that front. I also think that with the way bond yields are headed, the interest on the debt burden is probably going to be weaker than that perhaps planned.
"So there are offsetting components."
The Progressive Conservative Party, which is seeking a second term in office, said it remains confident 40,000 new private-sector jobs will materialize in Manitoba if the party wins again.
Manitoba remains first among provinces in the growth of private-sector capital spending and U.S. exports, spokesperson David von Meyenfeldt said in a statement.
Manitoba's Liberal Party said it predicted a slowing economy.
"Manitoba's sputtering economy is because the Pallister PCs are choking off growth," Liberal Leader Dougald Lamont said in a statement. "The government's own experts said they have no plan for economic growth and that persists to this day."
St. James NDP candidate Adrien Sala claimed in a statement the Tories have cost the province "thousands of good jobs" by reducing infrastructure spending.
Green Party Leader James Beddome said in an interview he wondered whether a worsening economy prompted Pallister to call an early election.
Manitobans elect a new government on Sept. 10.
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