West bore brunt of recession

Commodity-producing provinces took the biggest hit to economic growth in the recession of 2009, Statistics Canada reported Wednesday.

But those mostly Western provinces are likely to return to top spot later this year, according to BMO Capital Markets economist Robert Kavcic.

Newfoundland and Labrador experienced the biggest decline, Statistics Canada said, with gross domestic product falling 10.2 per cent, a result of lower offshore-oil output and a protracted strike at Voisey's Bay nickel mine, owned by Vale-Inco of Brazil.

"Western Canada was also hit hard with declines of 6.3 per cent and 5.1 per cent in Saskatchewan and Alberta, respectively, much deeper drops than initially estimated," Kavcic said.

"Lower exploration activity and construction [in both the residential and energy sectors] hurt in Alberta, while Saskatchewan saw potash output plunge about 50 per cent as export demand weakened.

"The more modest decline in B.C. was the result of pre-Olympics construction activity and strength in the real-estate sector, though output still fell a significant 2.3 per cent," he added.

Nevertheless, he added, "with commodity prices and global demand rebounding, Western Canada should reclaim its spot atop the provincial leaderboard this year."

Central Canada appeared to fare better in 2009. Ontario saw its economic growth diminish by 3.1 per cent, primarily as a result of a 20-per-cent drop in automobile and auto-parts production. Quebec, meanwhile, experienced a one-per-cent drop as the forestry, logging and manufacturing sectors recorded significant declines, the federal agency reported.

Yet Kavcic noted: "The big gap between the West and Central Canada is not totally representative of who suffered the most during the recession. Ontario looks relatively good . . . but if you look at other metrics like the unemployment rate or total decline in jobs, Ontario is definitely among the worst hit in Canada."

Prince Edward Island was the only province not to post declines in 2009, during which its GDP rose by 0.6 per cent, as increased aquaculture output and higher lobster landings more than offset a decline in agriculture.

Declines were also modest in Nova Scotia and New Brunswick, where GDP fell 0.5 per cent and 0.8 per cent respectively.

New Brunswick's drop was a result of a decline in construction as several engineering projects neared completion, while Nova Scotia was affected by reductions in mining and oil-and-gas extraction.


(prepared by John Morrissy/Financial Post/Vancouver Province