Click chart for enlargement

c-01395.jpg (38895 bytes)

c-01394.jpg (56706 bytes)

c-01396.jpg (80279 bytes)

outlook.jpg (2587 bytes)

  • Real GDP growth to lead all provinces for second year.
  • Gains to be broadly based led by exports and investment.
  • Employment growth to continue.
        
 

Strong Growth Continues

The Economy

Broadly Based Expansion in 1998

The economy performed strongly in 1998 turning in its best performance in a decade. Real Gross Domestic Product (GDP) grew by an estimated 4.4%, the strongest growth rate of any province. Growth was led by the private sector with broadly based gains recorded in exports, consumer spending, and investment. Export growth, estimated at 10.6% in real terms, was led by Hibernia oil production but significant growth was also posted by fish products and mining. The total value of exports reached $5 billion for the first time. Consumer spending also increased in 1998, with the value of retail trade increasing by 3.3% supported by higher employment and incomes. Capital investment grew by 2.3% last year with manufacturing, communications, and public infrastructure being the main contributors. Gains in economic activity translated into more jobs as the annual average employment level advanced by 6,000 or 3.1% to 197,900.

Population declined in 1998 as net out-migration continued to exceed the natural population increase (births minus deaths). Higher than normal levels of net out-migration began to emerge earlier in the decade, a result of the groundfish moratorium and major changes to the UI program at a time when other parts of the country, notably Ontario and Alberta, were experiencing stronger employment growth. A slowing of net out-migration in the third quarter, however, was enabled by the Province's strengthening economy and continued employment growth.

Positive Outlook

Another year of strong economic growth is expected in 1999, with the forecast calling for a 5.0% increase in real GDP. Employment growth is forecast at 2.5% with the unemployment rate dropping to 16.9%. The improvement in job opportunities in the Province should lead to a continued, gradual lessening of out-migration. Personal income will also benefit from the employment growth.

Exports and investment will be the main engines of economic expansion in 1999, however, consumer spending will also make a positive contribution. In the export sector, production from Hibernia could as much as double, newsprint output will rebound from depressed levels that resulted from last year's strike at Abitibi-Consolidated, and fish product exports are expected to continue rising. The investment sector will benefit from spending on the Terra Nova oil development, the largest construction project to take place in the Province since the massive Hibernia development.

Consumer spending will benefit from rising employment and personal incomes. Retail trade and residential construction are forecast to increase in response to rising incomes. Tourism, manufacturing and services (both business and personal) will benefit from increased domestic demand, and will contribute to growth in the export and investment sectors.

Beyond 1999

The economic outlook beyond 1999 is also encouraging. Prospects are favourable for future oil developments, including Hebron-Ben Nevis and Whiterose which have advanced to the delineation stage. The $10-12 billion Labrador Hydro Project is expected to begin construction in 2002, pending the conclusion of negotiations this year between Newfoundland and Labrador Hydro and Hydro-Quebec. Although development of the Voisey's Bay project has been delayed, it continues to hold the promise of significant future economic growth and development opportunities. Besides these mega projects, significant commercial potential exists in further expansion of traditional industries such as the fishery and emerging sectors such as tourism, information technology, value-added manufacturing, and others.

Selected Economic Indicators
Newfoundland and Labrador
1997-1999f

1997 1998 1999f
GDP at market prices ($m)
% change
10,467
-1.9
10,917
4.3
11,227
2.8
GDP at market prices (92$m)
% of change real
9,878
-1.3
10,313
4.4
10,830
5.0
Personal Income ($m)
% change
% change real
9,782
-1.3
-3.2
9,929
1.5
1.3
10,190
2.6
1.8
Retail Trade ($m)
% change
% change real
3,704
6.1
4.2
3,827
3.3
4.4
3,908
2.1
1.6
Capital Investment ($m)
% change
% change real
2,654
14.8
13.8
2,715
2.3
3.0
2,966
9.3
7.5
Labour Force (000's)
% change
236.2
0.3
241.1
2.1
244.1
1.2
Employment (000's)
% change
191.9
1.1
197.9
3.1
202.8
2.5
Unemployment Rate (%) 18.8 17.9 16.9
CPI (1992 = 100)
% change
108.2
2.1
108.4
0.2
109.3
0.8
Housing Starts
% change 
1,696
-16.6
1,450
-14.5
1,484
2.3
Note: f: forecast (Government of Newfoundland and Labrador), March 1999. Statistics Canada; Canada Mortgage and Housing Corporation; Economics and Statistics Branch, Department of Finance.

Contents  Previous  Next