- GDP contraction of 2.0 per cent expected in 2016, followed by growth of 0.7 cent in 2017 - Canada GDP growth expected to be
1.3 per cent in 2016, 2.1 per cent in 2017
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(Marketwired - Oct. 6, 2016) - The economy is expected to contract in
Newfoundland & Labrador this year, but growth will follow in 2017, according to the BMO Blue Book released today by BMO Capital
Markets Economics and BMO Commercial Banking.
Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the expertise of BMO's economists with information
about current national and provincial business conditions provided to BMO's commercial bankers by local businesspeople.
"Real GDP is expected to contract by 2.0 per cent this year-among the weakest performances in Canada-after a 2.2 per cent
decline in 2015," said Robert Kavcic, Senior Economist, BMO Capital Markets. "Longer term prospects are less dire, however based
on our forecast for WTI oil grinding back toward $60 by the end of 2017, which should support longer-term development of the
offshore sector and ease the strain on government finances."
"Newfoundland & Labrador's oil sector makes up roughly 22 per cent of provincial GDP and more than 7 per cent of
employment-both shares are just slightly smaller than in Alberta," said Mr. Kavcic. "As a result, the slide in oil prices has hit
incomes hard in the province. Production also continues to drift down after peaking in 2007, at least until the pipeline is
filled with new output, such as Hebron in late-2017."
The report also notes that employment has been gradually declining since 2013, with retail sales slowing and average home
prices down.
"Many businesses across Newfoundland & Labrador are facing great challenges with the decline in global energy prices," said
Lynda Taylor, Senior Vice President, Atlantic Provinces Divisions, BMO Bank of Montreal. "The oil and gas industry is a big part
of the province's economy. The bright side is oil fields are still operating viably because of low operational costs."
Meanwhile, the fishery industry in Newfoundland & Labrador, like the rest of Atlantic Canada, is experiencing a great upswing.
"Rising global demand, strong catches and the favourable foreign exchange rate are letting those in the fishing industry drive
growth across the province," said Ms. Taylor.
Ms. Taylor noted that BMO is here to help with a highly-skilled team of experts that can make lending decisions at the local
level to help its commercial clients boost productivity, expand into new markets and make strategic investment decisions that
will help propel growth and drive success.
The full BMO Blue Book can be downloaded at www.bmocm.com/economics.
About BMO Financial Group
Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With
total assets of $692 billion as of July 31, 2016, and over 45,000 employees, BMO provides a broad range of retail banking, wealth
management and investment banking products and services to more than 12 million customers and conducts business through three
operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.