OTTAWA – The Conference Board of Canada is predicting relatively stable economic growth on the Prairies this year and next, despite the loss of hundreds of millions of dollars in government subsidies.
In fact, the Ottawa-based economic forecaster said last week, the loss of the Crow Benefit grain transportation subsidy already is spurring diversification in Manitoba.
In its autumn outlook on provincial economic growth, the board said the Manitoba economy will grow faster than the national average because of an expansion of the manufacturing base and despite a slowdown in the farm sector.
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Diversification sparks economy
“Strong gains were recorded in the manufacturing sector as the economy began to diversify in response to the elimination of the WGTA (Western Grain Transportation Agency) transportation subsidy,” said the board report.
“The full income effect of the elimination of this subsidy is being cushioned by high world prices as world (grain) supplies approach a 20-year low.”
It said high grain prices and strong export income also will allow Saskatchewan to escape the full shock from withdrawal of the federal subsidy.
Processing plants spring up
Board director of forecasts Paul Darby said post-Crow Benefit diversification in Manitoba was highlighted because three processing plants already have been announced for pork, oilseeds and potatoes.
“We just count the ones already known,” he said. “We don’t speculate about future announcements.”
Overall, the board said the Canadian economy slowed during the first half of the year with high personal debt loads, low savings, high interest rates and flat consumer demand. “Housing starts have dropped to recessionary levels,” it pointed out.
While it pointed to high grain prices, it noted that spring flooding and pest problems reduced the prairie crop and limited farmers’ ability to take advantage of the high prices.
The conference board predicted next year, the economies of the prairie provinces will lead Canadian growth.
