Provincial Overview

The Provincial economy has had to contend with the same economic challenges that the national and other provincial economies have dealt with in recent years and, in addition, has been exposed to other extraordinary shocks. First and foremost, the economic adjustments that stem from the various groundfish closures which occurred since July 1992 have been, and continue to be, pervasive. The recent winding down of Hibernia construction has dealt a blow to investment and employment. As well, changes to Unemployment Insurance (now EI) and lower transfers from the federal government, while common to all provinces, have affected this Province disproportionately because of its high dependence on these monies. Furthermore, low birth rates and record levels of out-migration have reduced population for three years in a row -- Newfoundland was the only province in Canada to experience a decline in population last year.

Last year, real Provincial Gross Domestic Product fell by an estimated 2.1 percent due to weakness on the domestic front as consumption, spending by governments on goods and services and non-residential investment all declined.

Employment fell by 3.9 percent in 1996, due primarily to public sector restraint and lower Hibernia employment. The labour force also declined reflecting lower participation rates and labour force population (population 15 years and over). Overall, the unemployment rate rose to 19.4 percent, up from 18.3 percent in the previous year.

Labour income declined by almost one percent last year, reflective of lower employment. As well, UI/EI income fell by one percent and TAGS attrition reduced total payments under this program. In total, personal income is estimated to have declined by 1.7 percent.

Consumption

Consumer spending, as evidenced by retail sales, was curtailed by lower employment and incomes -- the value of retail trade fell by 1.2 percent last year (2.5 percent in real terms). Lower employment in key service industries suggests that consumer spending on services also fell last year.

Government

Commitments by the federal and provincial governments to achieve long-term fiscal stability resulted in lower expenditures and capital investment.

Investment

Investment on the Hibernia project declined by nearly 50 percent, thus reducing non-residential investment. Favourable interest rates encouraged stronger investment in housing, however, this did not offset investment declines in other areas.

Exports

Similar to performance nationally, the key strength in the economy last year lay in the export sector which served to partially offset declines on the domestic side. Exports of mineral and fish products were the driving forces behind export growth. The value of mineral shipments grew by an estimated 6.1 percent led by gains in iron ore and gold. The total volume of fish landed grew by nearly 30 percent; shellfish continued to drive the fishing industry with strong showings recorded for the crab, shrimp, clam and scallop fisheries. However, soft newsprint markets constrained export growth in this industry. Overall, real exports are estimated to have grown by 5.5 percent.

Main Page Contents Previous Section Next Section