Deloitte Canada’s economic outlook for Saskatchewan is looking optimistic for 2024, but several factors could sway things in either direction.
Deloitte is predicting a 1.1 per cent GDP growth for Saskatchewan in 2024, one of the higher increases compared with other provinces.
The provincial forecast had the province near the back of the pack in 2023 due to dry growing conditions in the province.
“However, as commodity markets settle in 2024, we expect to see a rebound for potash. We expect this, combined with the start of BHP’s stage 2 expansion of its Jansen potash project, to push growth to 1.1 per cent in 2024—more than double the national average,” the forecast said.
Dawn Desjardins, chief economist at Deloitte Canada, said 2024 will be off to a rough start, as weakening economic conditions that started in the third quarter of 2023 will likely persist into the first half of this year.
“But as rates start to move down we anticipate the economy will begin to recover, and that, as we round out 2024 we’ll be on really strong, firm footing for the economy. And that will persist in 2025,” Desjardins said.
She said they expect to see Saskatchewan have a stronger outlook compared with the national average, but said the province should still anticipate a weak economy to start the year.
Desjardins pointed to a number of factors helping Saskatchewan’s situation, saying there was lower household debt compared with other provinces, an increase in job creation and an increase in unemployment, but it was lower than other provinces.
She said we can expect to see sluggish labour market conditions and that unemployment will likely increase some more in the first half of 2024, but she expects interest rates to slowly decrease, creating consumer confidence.
“This should ignite some spending on the business side of the equation.”
She described this slower patch as an economy that’s stagnating and not seeing growth, but the trigger for that growth will come with a decrease in interest rates.
Jason Childs, an associate professor of economics at the University of Regina, said nationally, Canada is dealing with a lot of headwinds like debt and uncertainty regarding what is happening south of the border.
“There’s a lot of stuff going on in the U.S., our biggest trading partner, and it’s not clear what’s going to happen to them. Typically, what happens to them happens to us, so we’ve got to be really cognizant of that,” Childs said.
He said in the Prairies, commodity prices are soft, pointing to prices in oil and potash still being lower than the peak they had a year or two ago.
“Those lower prices really limit what we’re going to generate from the economic activity we typically see.”
Childs says Saskatchewan is a commodity-producing province, adding that’s where its advantages lie.
He said when we look at how commodities are affecting GDP, we need to consider how much we are producing and what it’s selling for.
He pointed to BHP’s Jansen mine expansion, saying more units will be produced and that there is the possibility of that expansion dampening the price of potash.
“Because we are such a big player in the global potash market that effect is something we do need to be at least thinking of. I don’t think Jansen’s going to destroy the price, but it could tamp down some of the positive effects we might otherwise see.”
Childs said the economic outlook in Saskatchewan will also be largely impacted by what happens in agriculture this year, as agriculture represents anywhere between seven per cent and 13 per cent of the GDP.
He said if farmers don’t see that income there will likely be a drag effect on the economy and there won’t be as much spending.
Childs said he doesn’t foresee that GDP growth unless we see a normal growing year for farmers as well as an increase in potash prices.