Government backs off forecast for economic growth in 2014
The territorial government has revised its economic forecast for 2014,
The territorial government has revised its economic forecast for 2014, scaling back predictions of major growth from five months ago but prophesizing a sunny outlook for the mining, building, retail and tourism sectors relative to 2013.
In a report released yesterday, the Department of Economic Development dialed down expectations for growth in the gross domestic product to roughly three per cent from about nine per cent last September.
“The expectation is that growth will be fuelled by higher production at current producing mines and expenditures related to mine development, as well as other construction activity,” the report states.
“Headwinds” for the mining sector last year included “weakness in mineral prices and a general slowdown in the global mining industry.
“The result was less activity in ... exploration, production and development,” the department acknowledged.
That chillier commercial climate followed successive seasons of “record-high exploration expenditures and the development of three new mines.”
Since those prosperous times, however, Alexco Resources has suspended operations at its Bellekino silver mine and mill in Keno City.
The indefinite shut-down occurred last fall, fewer than three years after it opened.
Meanwhile, Yukon Zinc laid off workers and cut back production at its Wolverine Mine by 30 per cent due to falling zinc and silver prices, but has since ramped activity back up.
“The government has finally taken off their rose-coloured glasses and released a more reasonable estimate for the 2014 year,” NDP Leader Liz Hanson said in a press release Tuesday. “The unrealistic projections touted by the government last fall mislead the public and call into question the government’s planning ability.”
The limited GDP increase of one per cent in 2013 would, if accurate, nonetheless mark 10 years of consecutive growth, which coincides with more than a decade of Yukon Party rule.
The government also dropped the expected value of building permits for this year by $40 million, revising it to a predicted $85 million from $125.
“Such a large discrepancy in the economic forecasting for 2014 published just five months apart does not reflect well on the government,” Hanson said.
“It indicates that they are either off on their math or misleading the public on the economy.”
Housing starts, too, were down to about 240 units in 2013, but remain above the historical average, according to the report.
Nonetheless, non-residential construction could ramp up this year with more permits expected for the F.H. Collins School replacement in Whitehorse, ongoing development of the city’s newest subdivision — Whistle Bend — and possible new mine development across the Yukon.
Retail sales are expected to rise back up to more than $680 million from an estimated drop to $655 million in 2013 — the first annual decline since 2009, the report states.
The government also projects more people visiting the territory, with border crossings expected to grow to 350,000, the third straight year of growth.
The estimated 345,000 crossings in 2013 signified an eight-per-cent leap and a possible record number of visitors — the figures do not distinguish between tourists and residents.
Hanson approved of the numbers too — though not any government role in bolstering them.
“Once again we see the resilience of the tourism sector despite the government’s lack of leadership when it comes to supporting this important sector of our economy,” she said in the release.
Hanson repeated her criticism from last year about the lack of economic diversity in the territory.
“The government has ignored the risks of its sole focus on the non-renewable resource sector and has been slow to address the need to diversify Yukon’s economy,” she said in the release.
Alexco’s Bellekeno mine, which also produces lead and zinc, closed temporarily last fall because of a major slump in a once-sterling market.
More than 140 Alexco and contract employees were laid off, with hopes to return to work in this spring if silver prices rise.
The government’s brighter outlook last fall assumed that Alexco would reopen its Bellekeno operation in the spring and that the Wolverine Mine would re-hire all the workers it laid off, Hanson said last September.
The Wolverine Mine has increased production since that statement, but there’s been no indication from Alexco that it plans to restart operations this spring .
Meanwhile, there also no guarantee that the Eagle Gold mine project will start construction in the new year, Hanson noted last September.
Mineral exploration spending in the Yukon last year was down 70 per cent from 2012, according to territorial government records.
About $45 million spent in 2013 measures up poorly to the $150 million put out in 2012, itself just half of the $300 million spent in 2011.
Last year’s expenditures are the lowest since 2005, when the exploration and mining industry began to emerge from the doldrums of the late 1990s and early 2000s.