2003 Performance
|
Economic activity,
as measured by real Gross Domestic Product (GDP), is expected to
increase by 4.3% this year (or by 1.0% when growth is adjusted
to reflect the fact that a significant portion of income
generated by oil production does not remain in the province).
This figure is revised down from the 5.4% growth projected in
the March forecast because of lower than expected oil exports.
As in recent years, growth in GDP stems mainly from exports and
consumer spending.
Real exports are expected to expand by 7.7% this year due
primarily to increased oil production but also aided by small
gains in fish and mineral exports. Oil production is now
projected to be up by almost 20% as output gains are realized at
both Hibernia and Terra Nova.
Investment is expected to grow by 7.5% this year, to reach
$3.8 billion. Capital spending is buoyed by development of the
White Rose and Voisey’s Bay projects as well as high levels of
residential investment.
Consumption growth has continued to be strong in 2003. Retail
sales totalled $3.5 billion in the first eight months of the
year, an increase of 6.1% over the same period in 2002.
Employment and income gains, combined with relatively low
interest rates have stimulated growth in consumption in the last
several years.
|
Economic Indicators
(Annual % change unless
otherwise indicated) |
| |
2002
|
2003f
|
| Gross Domestic Product |
|
|
| Nominal |
16.6 |
4.4
|
| Real |
15.4 |
4.3 |
| Real Adjusted* |
5.0 |
1.0 |
| Personal Income |
|
|
| Nominal |
4.1 |
4.5 |
| Real |
1.6 |
1.3 |
| Personal Disposable Income |
|
|
| Nominal |
4.2 |
4.2
|
| Real |
1.7 |
1.0 |
| Retail Sales |
|
|
| Nominal |
2.9
|
6.1 |
| Real |
2.4 |
3.9 |
| Housing Starts |
35.3 |
3.4 |
| Employment |
1.2 |
2.2 |
| Labour Force |
2.2 |
2.0 |
| Unemployment Rate (%) |
16.9 |
16.8 |
| Population |
-0.5 |
0.1 |
f: forecast, Department of Finance, November 2003
* Note: Adjusted GDP is lower because it excludes oil production
income accruing to non-residents.
Department of Finance; Statistics Canada |
|
|
|
| Employment is forecast to
increase by 2.2% this year to an average of 218,500 person
years. The unemployment rate is expected to decline
slightly to 16.8%. During the first ten months, employment
has averaged 2.0% higher than 2002 and the average
unemployment rate was just slightly lower (down 0.2
percentage points). Despite the continuing improvements in
labour markets, the province’s unemployment rate continues
to be well above the national rate.
Increased employment and wage gains have been reflected
in labour income, a key component of personal income.
Labour income totalled $3.6 billion in the first six
months of 2003, 6.4% higher than the first half of 2002.
Once inflation is accounted for, labour income grew by
2.3% in the first half.
|
| Consumer Inflation |
|
 |
| Statistics Canada;
Department of Finance |
|
|
So far this year, average inflation has been the highest in more than a decade. Inflationary pressures stemmed primarily from high energy costs and rising insurance prices. The Consumer Price Index (CPI) averaged 3.3% higher in the first ten months of 2003 compared to the same period last year. Annual inflation in 2003 is expected to come in at about 3.2%. This will mark the highest annual inflation rate recorded since 1991, when the introduction of the GST caused a one-time increase in the CPI. |
2004 Outlook |
Economic growth is expected to continue in 2004, albeit at a slower rate than in recent years as gains in oil production taper off. On average, private sector forecasters are expecting real GDP growth of 2.9% for the province and employment growth of 1.6%. Growth will be broadly based with contributions from consumption, investment and exports. |
|
