A 2016 decrease in Saskatchewan’s gross domestic product (GDP) should force a provincial shift toward targeted investments, according to a University of Saskatchewan (U of S) political scientist.
Statistics Canada reported Monday that the province’s GDP fell one per cent in 2016, marking a second straight year of decline. The economic indicator represents the market value of all goods and services produced in the province.
“I think GDP is a very important indicator because it shows the general trajectory of where your economy is going,” U of S political scientist Greg Poelzer said in an interview Monday.
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The Saskatchewan government would be wise to use the report as a signal to start putting away a portion of its resource revenue into a sovereign wealth fund, according to Poelzer. He described the fund as essentially “a giant RRSP” for a jurisdiction.
“Take what we have as our bottoming out and any dollar above what the province currently gets … put that into a sovereign wealth fund,” Poelzer said.
“We haven’t done that, we need to do that now.”
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Poelzer also said that Saskatchewan would also benefit from investing in its First Nations communities as well as the resource energy sector. He noted that “the federal government wants to make large investments” in renewable energy, especially in First Nations communities.
“If we invest in First Nations, invest in renewable energy that gives us an additional track on top of agriculture and on top of our other wealth in our natural resources.”
GDP drop due largely to declining construction industry, according to report
The Statistics Canada report cited a 14 per cent decrease in construction as key factor in the province’s downward GDP trend for 2016. Saskatchewan Construction Association president Mark Cooper agreed that last year was “pretty tough” for the industry.
“We saw significant reductions both in terms of work force and volumes of work,” said Cooper.
Cooper said part of the problem lies within the province’s struggling resource sector. He noted that certain mining projects are now complete and many expansions are being delayed, meaning Saskatchewan’s industrial construction companies are being hit hardest.
“We’ve seen a lot of layoffs in that sector,” Cooper said.
“We’ve also seen it in the residential sector in Saskatchewan and so both sides of the spectrum we’ve seen layoffs and we’ve seen pressure on the workforce there and on the companies.”
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The landscape has forced many companies toward the commercial sector, according to Cooper, which has created more competition. However, he added that insiders are hopeful “we will see the beginnings of a rebound in the construction sector in Saskatchewan in 2017.”
“We believe that we’re going to see our economy come back to about 2012 levels, at about two to two and a half per cent, which we believe is sustainable growth for our province,” Cooper said.
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