The Conference Board of Canada is once again calling Yukon’s economic forecast “bleak.”
“Of all the provinces and territories, Yukon’s economy is facing the bleakest near-term outlook,” reads the board’s latest territorial outlook, released this week.
“Bad news keeps piling up for the territory’s mining sector.”
The report predicts Yukon’s GDP will grow by 3.6 per cent in 2016, before dropping by 7.7 per cent in 2017 and 3.1 per cent in 2018.
That decline is largely due to the fact that Minto, Yukon’s one remaining hard-rock mine, is slated to close next year.
“This will leave the territory without large-scale mining operations by mid-2017,” the report reads.
The outlook also predicts that Yukon will begin posting deficits next year, and will start to accumulate net debt in 2018.
Last summer, the conference board also referred to Yukon’s forecast as “bleak” when it accurately predicted that the territory’s economy would shrink for the third year in a row in 2015.
“I think it’s out of the government’s hands,” said Marie-Christine Bernard, associate director with the conference board. “The mining industry is going through a really difficult time. Commodity prices have been dropping for a number of years. It’s difficult for mining operations all across Canada.”
The report does predict that Yukon’s economic fortunes will look up by the mid-2020s, as commodity prices pick up and new mines start producing, including the Coffee, Eagle Gold and Casino projects.
It suggests the economy may grow by an average of 10 per cent per year between 2024 and 2028.
Despite the mining slump, Bernard said the Yukon government’s investment in infrastructure “does compensate for some of the weakness we’re seeing in the mining industry.”
The report mentions several infrastructure projects that are buoying the territory’s construction sector, including upgrades to bridges, airports and highways, construction of the Whistle Bend continuing care centre and the new Salvation Army centre, and the expansion of the Whitehorse General Hospital.
Employment is expected to decline by 1.3 per cent this year, and to continue to drop in 2017 and 2018. However, the territory’s population is predicted to grow steadily until 2030, when it is projected to reach just over 39,000 people, up from 37,591 today.
This isn’t the first prediction that Yukon’s economy will shrink next year. In May, the territorial government released its own outlook, which suggested that GDP would grow by 2.8 per cent in 2016 and fall by 5.7 per cent in 2017.
But that report didn’t include predictions about the territorial budget. The conference board is projecting that the Yukon will run a $29.7-million deficit next year and will continue to post deficits until 2022. It also predicts that the Yukon will accumulate $75.1 million in net debt by 2018, and more in subsequent years.
The Yukon Party government has taken great pride in the fact that it currently has no net debt and continues to post modest surpluses. But to achieve that, it has been spending down the territory’s net financial assets, which will make it harder for the next government to avoid a deficit or spending cuts.
On Thursday, Premier Darrell Pasloski wouldn’t say whether he would balance the budget in 2017 if he were re-elected.
“We have focused on that every year, and we’ve delivered on that every year,” he said. “My commitment is to being financially responsible to Yukoners and looking after their money and essentially living within our means.”
Pasloski said he expects all major sectors of the economy except for mining to grow in 2017. He also said the conference board predictions may not come true.
“There’s a lot of variables right now that could change since they made that forecast that could have a tremendous positive impact on Yukon’s mining and overall economic growth for next year,” he said, citing the possible construction of the Eagle Gold project or the reopening of Alexco’s Bellekeno mine as examples.
But NDP Leader Liz Hanson accused the Yukon government of putting all of its eggs in the mining basket.
“When you have a small economy like the Yukon, a small population, and you choose not to diversify in any meaningful way … then you face the perils that we are facing now,” she said.
She also blamed the government for spending down its surplus on “big, shiny projects” like the new F.H. Collins school.
If the NDP forms the next government, she said, it will focus on “small, scaleable projects” instead.
“If that means a slight deficit, well, that may be what it is.”
Contact Maura Forrest at email@example.com