Economy still strong, long after recession
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Hey there, time traveller!
This article was published 06/11/2015 (2693 days ago), so information in it may no longer be current.
It seems like the only time Manitoba’s economy shines is when things are falling apart all around it.
That was definitely the case in the Great Recession, when Manitoba’s GDP shrank by a mere 0.3 per cent and the rest of the country declined by nearly three per cent.
Since 2009, Canada’s economy, including Manitoba’s, has been growing.
But the surprising thing is, Manitoba continues to lead the country in a number of economic metrics averaged out over the last five years.
That’s happened even though the fundamental dynamics in Manitoba have not changed. It remains one of the most diversified economies in the country, with 11 different sectors making up at least five per cent of the provincial GDP. But that ballast has proven to be very valuable in the post-recession years as a reset has been going on throughout much of the North American economy.
At Thursday’s annual outlook conference held by the Manitoba Association of Business Economists (MABE), Narendra Budhia — who crunches the economic numbers for Manitoba Finance — showed how Manitoba’s economic performance has quietly turned the province into a little star.
Budhia aggregates the numbers from the nine banks and other public economic forecasters. Those forecasts see Manitoba as having the second-strongest economic growth in 2015 and the third-best in 2016.
Over the past five years, the economic profile has been so sturdy as to exceed Manitoba’s normal pattern of quickly slipping back to the middle of the pack when the country recovers from downturns. For example:
— this year, Manitoba is leading the country in employment growth at 1.9 per cent;
— it has the second-lowest unemployment rate;
— it has the second-highest population growth rate;
— from 2009 to 2014, Manitoba had the highest average annual growth rate in residential and non-residential construction investment at 8.9 per cent (as measured by building permit values); and
— since the Great Recession, Manitoba has had the third-strongest growth in manufacturing jobs.
While Manitoba lost about 10,000 manufacturing jobs in the recession, it’s since gained 6,000. Nationally, the recovery in manufacturing jobs has been almost non-existent.
All those small clusters of activity in manufacturing, mining, agriculture, construction, finance, wholesaling and utilities means each of them can bolster the others during the difficult points in the cycle. That may mean the only time there are real spikes in the economic numbers are the years when there are bumper crops and commodity prices are high. It also means the solid base that creates small, incremental growth gradually becomes sustainable growth that is predictable.
At the MABE event, Greg Dandewich, the vice-president of Economic Development Winnipeg, showed with Winnipeg accounting for 66 per cent of the provincial GDP (compared with 53 per cent of the Saskatchewan economy from Regina and Saskatoon combined, and 68 per cent of Alberta’s from Calgary and Edmonton), that slow-growth profile has helped get Winnipeg on more radar screens.
There may be a downside to all that diversification in Manitoba, however. The Conference Board of Canada’s recent innovation report gave Manitoba a “D” grade and ranked it 23rd out of 26 jurisdictions.
Michael Legary, the past chairman of the Winnipeg Chamber of Commerce and the founder of Startup Winnipeg, argued a significant rethink is necessary to prevent a situation it cannot recover from, where Winnipeg remains a “regional” centre.
Levels of research activity, both private- and public-sector-funded, are well below average levels. Legary said investment incentives as a tool to attract research and/or venture capital investment in the province have become virtually non-existent.
There is a strong entrepreneurial spirit that exists here. But it needs to figure out a way to leverage the strengths of the strong economic foundation to keep that spirit alive.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.