Province a GDP leader

April 29, 2008
Winnipeg Free Press
Written by: Murray McNeill

Manitoba turned in one of the best economic performances in the country last year and economists say a good grain crop would keep it near the top in 2008, as well.

New Statistics Canada figures issued Monday show Manitoba tied with Alberta for the second highest economic growth in the country last year at 3.3 per cent.

It was the province's best economic performance since 2000, when it rang up real gross domestic product (GDP) growth of 4.3 per cent.

And even though a U.S. recession is threatening to put a crimp in manufacturing sales and exports this year, economists say other sectors of the economy are poised to pick up the slack.

"Manitoba is in a good position right now," Michael Benarroch, dean of the University of Winnipeg's Faculty of Business and Economics, said in an interview.

Benarroch said that because of its diversity, Manitoba's manufacturing sector is expected to weather the U.S. slowdown better than most provinces.

And commodity prices are expected to remain high, he said, so even if 2008 is just an average year for grain and mineral production, that should be more than enough to offset any drop-off in manufacturing shipments.

On top of that, Manitoba is expected to rake in $3.9 billion in federal transfer payments this year, said John McCallum, an economics professor at the University of Manitoba.

"Manitoba is in a real sweet spot in our economy. We've got these incredibility high transfer payments, we've got these really good commodity prices... and we've got low and falling interest rates."

He said the latter should help stoke personal spending, which saw its biggest yearly increase in 23 years in 2007, and that should also help offset the negative impact of a manufacturing slowdown.

McCallum noted 2007 was the second consecutive year that the Manitoba economy outperformed the Canadian economy, which had growth of 2.7 per cent in 2008.

"And we could do better than the Canadian economy again this year," he said.

Manitoba's chief statistician said its been nearly two decades -- 1989-90 -- since the Manitoba economy outperformed the national economy for two years running. And it's been at least 27 years since it's happened three years in a row, Wilf Falk said.

Falk also likes Manitoba's economic prospects for 2008. He said the average projection from the seven or eight forecasters who regularly track the province's economic fortunes is for 2.7 per cent GDP growth this year and in 2009. That compares to projected growth of 2.1 per cent and 2.5 per cent for the Canadian economy.

Falk and Benarroch agreed some manufacturing sectors are hurting from the U.S. slowdown. Furniture, clothing and window-and-door manufacturers are some of the ones that come to mind.

But others, like bus manufacturing and aerospace, have plenty of orders to carry them through this year, they said.

"All in all, it may not be as bad as it looks at first blush," Falk added.

Statistics Canada said there was no shortage of contributors to last year's strong economic performance.
"Construction investment advanced at a feverish pace, with work ongoing at several large projects around the province. A recovery in manufacturing, particularly primary metals and transportation equipment, resulted in goods production outpacing services production again in 2007."

McCallum said a strong goods-producing sector is good news for the province.

"The goods sector is important because the goods sector is often where you get... the good, higher-paying jobs," he said.

Statistics Canada said the province's goods-producing sector posted growth of 4.3 per cent last year, while services production was up by 3.2 per cent. Other big contributors were the construction sector (up 13.7 per cent), retail trade (up 7.6 per cent), manufacturing (up 4.6 per cent), industrial production (up 3.8 per cent) and wholesale trade (up 2.6 per cent). The only key industry to see a decline in output was agriculture, forestry, fishing and hunting (down 3.2 per cent).

Nationally, five provinces and three territories had GDP growth that topped the Canadian average last year. Newfoundland and Labrador led the charge with a staggering 9.1 per cent growth, and Statistics Canada said increasing mining and oil extraction were the driving forces behind the impressive performance.

murray.mcneill@freepress.mb.ca

Strong performer

Manitoba real GDP growth (in percentage terms) for the past eight years:

-- Source: Statistics Canada

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