FREDERICTON, June 25, 2009 – Although
the New Brunswick economy faces weakness on the commodity price and export
fronts, still-strong capital investment has buffered the downturn, according
to the Provincial Outlook report from BMO Capital Markets Economics.
“Real GDP will likely contract a better-than-average 1.3 per cent
this year in the province, before rebounding 1.7 per cent in 2010,” said
Robert Kavcic, Economist, BMO Capital Markets.
A number of major
capital projects like the $1.4 billion Point Lepreau nuclear plant
upgrade
and $2 billion Canaport LNG terminal have helped
keep the province’s labour and housing markets relatively steady
in the face of weak U.S. export demand, particularly in forestry. “New
Brunswick has not lost any jobs since the start of 2008,” said
Kavcic. “However, a number of these important projects are winding
down, removing key pieces of economic support.”
Other construction
projects and a two-year, $1.2 billion government infrastructure spending
program
should help fill most of the void heading
into 2010. At the same time, a restructuring of the tax system will provide
$144 million in tax savings in fiscal 2009/10, rising to $380 million
by fiscal 2012/13. “This will come in the form of both personal
and general corporate tax cuts, the latter of which will lead to the
lowest rate in Canada by 2012,” noted Kavcic.
Against this backdrop, the Province of New Brunswick is projecting a
significant widening of its budget deficit to $741 million in fiscal
2009/10. This marks the largest budget deficit as a share of GDP (2.7
per cent) since fiscal 1987/88, but is accompanied by a plan to return
to balance in four years.
The complete report can be found at www.bmocm.com/economics.
-
30 - |
