Many said province could withstand economic blows from oil and gas, but there are troubling signs
When crude oil prices began to plummet, economists comforted Saskatchewan residents that their diversified economy would safeguard them during the oil and gas slump.
In fact, Saskatchewan’s economy isn’t that diverse.
The province relies heavily on natural resources: fuel, food and fertilizer.
The Canadian Association of Oil Drilling Contractors forecasts it will drill half as many wells in 2015 compared to 2014.
And while economists were banking on the agriculture and potash industries to offset energy losses, they’re no longer confident that will happen.
The potash industry remains strong in production, on par with its growth last year, but nitrogen prices have fallen about $60 US a tonne.
Most worrisome, it’s shaping up to be a disappointing crop year for many Saskatchewan farmers, thanks to an unwelcome mixture of spring frost, drought and poorly timed rains.
While cattle prices remain high, drought has jeopardized hay yields and could force some ranchers to sell off their herd.
The Bank of Montreal has already downgraded its growth projection for Saskatchewan this year from one per cent to half a per cent.
“It’s disappointing,” chief economist at the Bank of Montreal, Douglas Porter, said. “The likelihood of a pretty tough crop this year further dims the outlook for western Canada.”
The Royal Bank of Canada told CBC News it expects to downgrade its growth projection next month as well.
Premier Brad Wall says he’s still confident the province can overcome economic pressures, and points to his government’s four-year plan to spend $5.8 billion on infrastructure.
Still, there are already red flags for the economy. Here are five signs of trouble:
1. Housing sales
The honeymoon is over for Saskatchewan’s housing boom.
The Canadian Real Estate Association predicts house sales in Saskatchewan will decline by nearly 13 per cent this year.
…click on the above link to read the rest of the article…
