Originally published in the July 2012 issue of the Nova Scotia Business Journal - "Outlook 2012 - Progress Report" special advertising feature
Over the next six months and into 2013, the Nova Scotia economy will continue to deal with a variety of challenges combined with as many opportunities, according to economy watchers.
RBC Economics’ recently released provincial outlook report predicts Nova Scotia’s economy will see real GDP growth of 1.6 per cent in 2012, increasing to 3.2 per cent in 2013.
“Excluding export performance, Nova Scotia’s improved employment picture and its healthy increase in retail sales have supported moderate growth in the economy,” notes Craig Wright, RBC senior vice-president and chief economist. “We expect to see the economy rebound in 2013, with the start of work on the shipbuilding contract, investment ramping up in the Donkin coal mine, a full year of production at Deep Panuke and the anticipated pick-up in the forest product sector.”
This optimism is echoed by Premier Darrell Dexter.
“We are showing growth in the GDP for the first time in 20 years,” said Dexter.
He described the return of Shell to explore the offshore as the result of one of the largest initiatives of its kind in Nova Scotia's history.
“The provincial government over a number of years put together detailed and valuable information on the potential of offshore drilling and it is now paying off. As a result we are now receiving many more inquiries into the offshore potential.”
Dexter noted that three-quarters of the nearly one billion dollar investment by Shell will be spent onshore to support the drilling efforts.
He also highlighted the $25-billion shipbuilding contract, the Lower Churchill project and the enthusiasm of both industry and workers to make Nova Scotia more economically valuable, as contributing to a mostly positive outlook for the remainder of 2012.
“There are challenges with the forestry-based industries,” said Dexter. “Most recent was Resolute Forest Products not being able to keep its Bowater Mersey mill operating in Queens County. This closure shows that no mill and no industry — even in rural Nova Scotia — are immune to the challenges facing the global economy.”
International investment will continue to be an important factor driving Nova Scotia's economy for the second half of 2012 and beyond, according to Stephen Lund, president and CEO of Nova Scotia Business Inc.
“International investment, often referred to as foreign direct investment, is a critical component of most growing economies and Nova Scotia is no different,” says Lund. “We compete in a global economy and competition for FDI is increasing daily.
“FDI is export intensive, highly productive, and accelerates supplier development through strategic partnerships or joint ventures with local companies. It also stimulates innovation, and it can be a catalyst for research and development.”
He said international companies tend to hire more new graduates and immigrants, invest in training and development of their staff at a higher rate than domestic employers and as well pay higher than average wages. New investment can transfer new skills and knowledge into the economy and can seed the next wave of entrepreneurs as well as drive provincial revenue.
“Nova Scotia’s financial services sector is a great example of new international investment. We have attracted leading international companies in hedge fund administration including: Citco, the world’s largest, Butterfield Fulcrum, Meridian and Admiral Administration. These investments have helped establish Nova Scotia as the fastest growing hedge fund administration centre in Canada,” says Lund. “As a result of these international investments, reinvestment is taking place in our province in the form of new spin-off companies, as well as new investment and new lines of business.
“FDI plays a critical element in growing our economy, but we have to remember it is just one of many. We also need to innovate more, increase productivity, encourage entrepreneurship and increase export. These are all key components in building a more robust and resilient economic outlook.”
Read more "Outlook 2012 - Progress Report" stories at: http://www.ns.dailybusinessbuzz.ca/Industry-Spotlight/Outlook-2012%3A-Progress-Report-23864