Yukon predicts bumper year ahead

The Yukon government has forecast a dramatic recovery for the mining industry in 2014. The economic outlook report was released last week. It predicts the territory's gross domestic product will have grown by 0.

The Yukon government has forecast a dramatic recovery for the mining industry in 2014.

The economic outlook report was released last week.

It predicts the territory’s gross domestic product will have grown by 0.9 per cent in 2013. That’s among the slowest in Canada, according to TD Economics’ July report.

But for 2014, Yukon has predicted 8.8 per cent GDP growth, driven largely by increased mining production and construction, as well as government capital expenditures.

That forecast depends on a relatively small number of mining projects sticking to ambitious timelines.

Victoria Gold must secure $400 million in financing if it is to begin major earthworks as scheduled for next spring.

Alexco’s Bellekeno mine has shuttered for the winter, and whether or not it restarts production depends both on a recovery in the silver price and the company’s ability to cut underlying costs.

Derrick Hynes, the government’s director of business and economic research, said the report is not specifically counting on any particular project to go ahead.

“What we don’t want to do in exercises like this is start naming off particular mines and what month of the year we anticipate that they’re going to start producing.”

But the government does expect a recovery in the mining sector in the next year, he said.

“All indications are for 2014 that the mining sector in particular will be healthy and robust. While there has been a slight decline in some commodity prices over this summer, it’s expected that in most cases they will rebound in 2014.”

Keith Halliday, a Yukon economist and self-professed lover of economic forecasts, said businesses need to understand the risk in interpreting reports like this one.

“It’s that old Yogi Berra quote: There’s nothing harder to predict than the future.”

Predicting Yukon’s economic future is particularly tricky, he said.

“The fact that our economy is smaller and more exposed to the mining sector means that our forecast will have more volatility than a larger province with a more diversified economy.”

Businesses must be ready for a scenario where the Yukon economy does really well and also for one where the outlook is not so great, he said.

“We have to be prepared for the possibility of bad news.”

Rick Karp, president of the Whitehorse Chamber of Commerce, is not feeling terribly optimistic, he said.

“It doesn’t seem to us as if the mining sector is going to produce what the department thinks it’s going to produce.”

While the economic outlook report shows modest declines in the retail sector for this year, the actual impact has been quite large, he said.

What’s hidden in the numbers is that while overall retail sales are in decline, gasoline sales are up quite a bit, said Karp.

So retailers that do not sell gasoline have taken a bigger hit than is immediately obvious, he said.

“When you’re talking about small businesses on Main Street, we’re seeing declines. We’re seeing consistent declines.”

While the chamber would be very pleased if the predicted growth for 2014 materialized, it is “a little skeptical,” said Karp.

“We’re pleased in a way that the Department of Economic Development is being so positive and so pumped, and that’s really good, but of course we would like to see some facts.”

Contact Jacqueline Ronson at

jronson@yukon-news.com