Categories: Economic News

Phil Tank: Big economic news for Saskatchewan needs honest context

The optimistic economic projections must be seen in the proper perspective that Saskatchewan has spent years mired in crisis.

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Saskatchewan’s economic forecast has been as bright as a prairie sunset.

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But the reality of these projections must be placed in proper context, despite the enthusiasm shared by the Saskatchewan Party government and Premier Scott Moe, often in social media posts that by definition lack proper perspective .

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Some of the big economic news has to be seen given that the province’s economy has been in turmoil for several years. In other words, part of that growth is simply digging yourself out of a hole.

Take, for example, a September report from the Conference Board of Canada that forecast real gross domestic product growth of 7.6% this year and 4.1% next year.

These kinds of predictions have fueled a lot of economic enthusiasm, and there’s certainly nothing wrong with that.

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However, a closer look at the report suggests that context remains important. The report, for example, is titled: “Nowhere to Go But Up.” An earlier report by the same agency this summer on Saskatchewan read: “Light at the end of the tunnel.”

These names alone point to the danger of simply looking at individual statistics and thinking they tell the whole story.

Among the highlights of the most recent report is that last year’s drought not only caused the province’s economy to shrink, the only province in Canada to shrink, but mark the third consecutive year of decline.

“Better days are coming,” reassures the report.

A more recent report from the Conference Board of Canada praised Saskatoon’s future, making the case that the province’s largest city is bringing to economic growth what Connor McDavid brings to hockey.

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Saskatoon’s economic growth is expected to outpace 12 other major Canadian cities with real GDP growth of 7.2% this year and 3.9% next year.

That sounds more cheerful than a Valentine’s Day bouquet, until you take a closer look at the full report.

Saskatoon’s economic output has essentially stagnated over the past eight years, with real GDP in 2020 almost five per cent lower than in 2014. Saskatoon’s real GDP growth of four per cent last year was almost a full percentage point less than the Canadian average. .

Regina also has a positive outlook with expected real GDP growth of 6.1% this year and 3.3% next year. However, it is vital to view this forecast knowing that the provincial capital’s real GDP declined by 4.4% in 2020 and only grew by a “relatively muted” 3.3% last year.

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Saskatchewan’s real GDP of $77 billion last year was the lowest in nearly a decade, since $74 billion in 2012.

Nobody wants to focus on the negative, especially when it’s in the past, and it seems natural for a government to promote economic optimism.

However, if that same government wants credit for the good times, it should have a similar degree of responsibility for the down times.

And, as most people know, Saskatchewan’s booming economy owes more to Vladimir Putin than Moe.

The Russian dictator’s invasion of Ukraine has created chaos for the global economy, but benefited key Saskatchewan industries due to higher commodity prices.

The war has plunged the world into economic uncertainty. And among that uncertainty is whether Saskatchewan’s economy will still expand after the war is over.

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An increase in royalties on commodities is expected to allow the province to balance the budget next year for the first time in seven years. It’s also why adults in the province are getting $500 from the government as a so-called affordability payment to offset inflation, months after other provinces took similar measures.

So expect Saskatchewan Party politicians to continue touting the province’s projected growth as somehow related to their government, while suggesting that federal government policies have shackled the economy.

But we all need to understand where we’ve been to truly appreciate where we’re going.

Phil Tank is the digital opinion editor for the Saskatoon StarPhoenix.

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