N.L. stands out from the rest of Canada in new GDP report, and not in a good way
Province the only one to mark a real GDP decline in 2018
New data out from Statistics Canada paints a rosy picture of economic growth across the provinces and territories for 2018, with one glaring exception: Newfoundland and Labrador.
While its economic woes are no secret, the numbers released Wednesday show a diverging path for the easternmost province, as its real gross domestic product (GDP) fell 2.7 per cent in 2018, the only place in Canada to have its real GDP drop.
That drop is bigger than the country's largest gain, Prince Edward Island's, at 2.6 per cent.
We have the most volatile economy, as measured by GDP, in Canada by far.- Dennis Bruce
Real GDP is measure of GDP that strips out the financial numbers and focuses on economic activity, and as such provides a more precise snapshot of economic growth than the other oft-cited form of GDP, nominal GDP.
One expert says forecasters expected Newfoundland and Labrador's poor performance in late 2018, and that it's worth taking the yawning gap between it and the rest of Canada with a grain of salt.
"In any one year, I wouldn't get too too excited about a minus three or plus three per cent number on GDP, because it's sort of the nature of our province," said Dennis Bruce, an economist based in Corner Brook.
"We have the most volatile economy, as measured by GDP, in Canada by far. So I think that's important to keep in perspective."
Most industries down
That volatility is thanks to a perfect (or imperfect, as the case may be) storm, of a small population with an appetite for megaprojects, all based in a resource-driven economy.
Add in that those resources are extremely susceptible to global fluctuation in their worth, or any production disruptions, and it's an economic rollercoaster ride with 2018 being one of those stomach-churning drops.
Bruce pointed to issues like the strike at the Iron Ore Company of Canada's Labrador City mine in the first half of 2018, or Husky Energy's offshore oil spill and subsequent temporary shutdown of its production platform in the fall, as helping the province's real GDP slide to Canada's economic basement.
"In an ideal world, we wouldn't be so dependent on any individual commodity, but the reality is, fundamentally, I'm not sure what else we would have to depend on," Bruce said.
Despite that not even particularly sunny explanation, it's hard to stay positive looking at the Statistics Canada report, that notes most industries in Newfoundland and Labrador suffered in the past year.
Construction fell almost 20 per cent, with notable declines in electric power engineering construction — thanks to the near-completion of Muskrat Falls — and declines in oil and gas engineering construction, since work at the Hebron oil field wrapped in 2017.
Goods-producing industries decreased close to six per cent, while even service-producing industries fell 0.2 per cent, "the first decline in more than 20 years," stated the report.
Fishing, hunting and trapping fell for the sixth year in a row, while seafood preparation and packaging also slumped by more than 16 per cent.
Same story for retail trade, with a four per cent decline, along with a slight decrease in mining.
There were a few bright spots, with manufacturing up more than four per cent, almost entirely thanks to activity at Long Harbour's nickel processing plant.
The public sector — mainly federal — inched up slightly as well, with a 1.5 per cent boost.
Examples of economic powerhouses aren't far away.
Prince Edward Island led the entire country for real GDP growth in 2018. Sixteen of its 20 industries grew, including many of the ones that declined in Newfoundland and Labrador, such as construction, seafood preparation and fishing, hunting and trapping.
Nova Scotia also grew for its fifth year in a row, while New Brunswick eked out a 0.1 per cent real GDP increase to avoid joining Newfoundland and Labrador in the red.
And before we join in the collective Newfoundland and Labrador pastime of blaming the province for all these problems, Bruce cautioned "government's role is certainly not necessarily to create that growth in the economy, but to establish the fundamentals whereby investment might be attractive here, and things like that."
Some economic forecasters are predicting a much better 2019 real GDP for the province, and in the meantime — or anytime — Bruce said economic diversification in any way should be encouraged, in any industry.
"Anything incremental is positive," he said.