It’s not us, it’s them, think-tank says

Opinion

Hey there, time traveller!
This article was published 03/03/2015 (3871 days ago), so information in it may no longer be current.

The first time the Conference Board of Canada included a Winnipeg stop in its economic outlook tour has coincided with the think-tank’s strongest forecast for Manitoba in many years.

Monday’s Winnipeg Business Outlook 2015 event — co-sponsored by the Winnipeg Chamber of Commerce — was preceded by the Ottawa-based think-tank’s most recent provincial outlook that has Manitoba producing the second-best GDP growth this year and the strongest by far in 2016.

Two of the Conference Board’s senior economists, Glen Hodgson and Pedro Antunes, delivered a fascinating economic overview, with Hodgson taking the global perspective and Antunes drilling down to Canada, Manitoba and Winnipeg.

Both acknowledged some good things are happening in Manitoba.

But just like their personal appearance in Winnipeg, Manitoba’s rise to the top of the economic growth heap is somewhat coincidental.

That is, the suggestion Manitoba will lead the nation in growth over the next two years is not really a result of anything different happening here.

It is far more a consequence of bad things happening elsewhere.

“There are few things that are really positive for the province,” said Antunes, the Conference Board economist in charge of the provincial outlooks.

But then, damning with faint praise, Antunes said, “Manitoba will take top spot but it’s not necessarily because you are doing that much better… it’s more so because competitors have been shot in the foot.”

That shot is, of course, the 50 per cent crash in oil prices that will take billions of dollars out of the oil producing provinces of Alberta, Saskatchewan and Newfoundland and Labrador.

It has also effectively lowered the value of the Canadian dollar that makes exports, to the U.S. in particular, much more attractive. Manitoba’s exporters can get behind that.

Among other things, that crash in oil prices will also mean a decrease in provincial out-migration from Manitoba.

The Conference Board had pegged that number at about 4,000 per year in the past, but is now forecasting a much lower 2,400 this year and next year.

That will mean better population flows for the province in combination with international migration to Manitoba, which has helped counter inter-provincial out-migration in the past.

Antunes and Hodgson said the construction industry is increasingly seen as one of the best job creators. So when construction is strong, employment will be strong and that will mean the housing sector will be strong.

“We have strong employment growth (in Manitoba) over the next couple of years,” Antunes said. “We think it will continue to drive the housing market (in Manitoba).”

Antunes said private-sector investment to increase production capacity to take advantage of global opportunities has been disappointing across Canada.

Also, partly because of demographics and labour force constraints, the new normal growth rates in Canada will be 2.0 per cent rather than the normal rate of 2.6-to-2.7 per cent in the past.

Manitoba’s realities could put this province in the sweet spot more often in the future.

‘We have strong employment growth (in Manitoba) over the next couple of years. We think it will continue to drive the housing market’

For instance, business investment in Manitoba has not faired badly.

One of the most dramatic charts the Conference Board showed on Monday was labour productivity growth across the country.

In the decade between 2004 and 2014 Manitoba was the only province the country — the only province — that showed productivity growth compared to the previous decade.

Antunes said there has been a lot of talk about the hit the Canadian economy took with the loss of manufacturing jobs in Ontario and Quebec with the last recession.

“The truth is we (across Canada) can’t compete in labour-intensive manufacturing jobs,” he said during an interview. “But Manitoba has somehow found success around that.”

Obviously there are some areas that the province cannot compete — thousands of garment and furniture manufacturing jobs have been lost in the last decade — but Antunes said some of the stronger niche players have done better than average going forward.

He said Manitoba’s bus manufacturers, aerospace and agri-food players are currently in strong positions.

The oil price decline has created a scramble to diversify the Alberta economy.

Antunes said that’s impossible when oil and gas production is such a dominating presence.

Because of the economic diversification here, Manitoba is looking good once again.

Like Antunes said, “Manitoba never does very well compared to other provinces… but it never does too badly either.”

martin.cash@freepress.mb.ca