Transfer payments from Ottawa and the development of new and operating mines in the territory should keep the Yukon's bubble economy from going flat this year, according to an economic forecast released by the territorial government last Thursday.

"A primary driver of growth in 2009 is expected to come from increased government spending," reads the report by the Department of Economic Development.

"Growth is expected to stem primarily from public spending on construction projects, mining development expenditures and increased mineral production."

However, expected stimulus in these areas will be balanced by declines in mineral exploration, tourism and a levelling-off of residential construction activity.

Unemployment, which hit seven per cent in April, will remain in that region, the report indicates, up from an average of five per cent through 2008.

The government and Yukon Chamber of Mines differ over projected drops in exploration spending for 2009 - the chamber says it will be 50 per cent less than the $110 million in 2008, while the government estimates it could fall by as much as 78 per cent. However, the good news is that development spending is expected to skyrocket.

The chamber predicts $172 million in new developments and the government estimates that dollar amount to be in excess of $200 million; both projections would far exceed the $25 million spent last year.

Also in 2008, the territory's population grew for the fifth year in a row.

In 2009, the number of people in the Yukon will climb to 34,200 from 33,378, according to the government's forecast.

But the housing squeeze in Whitehorse, combined with continued population growth, is expected to keep the price of homes high in the capital.

"There's a shortage of new available lots, and with our growth in population that's one of the fastest in the country ... as that spreads, there's going to be more pressure on pricing," said Terry Bergen, the Yukon Real Estate Association president and long-time agent for Coldwell Banker.

Last Thursday, Bergen hosted John Geha, Coldwell Banker's president of Canadian operations. Geha said the biggest problem for the real estate industry is not so much the recession, but consumer confidence.

"There's a couple of things that really bother me about the Canadian market," Geha told the Star.

We have to quit watching the United States because the issues down there are totally different.

"We have much better control over the financial markets and the banking system here in Canada than the United States did. We were not as heavily invested in manufacturing up here as the United States is and you didn't have the (real estate) speculation. That was what really hurt the U.S."

Geha added home markets are already rebounding in Vancouver and Calgary, and the fact that the global recession is having a minimal effect on the Yukon should bode well for sellers in this market.

Lower interest rates are also making it more attractive for the new home buyers, a market category which is enticing a new demographic to enter the action, he adds.

"We have a new buyer in the market around the country because of the lower prices and the lower interest rates that is bringing buyers that have not been able to afford in the past back out," said Geha.

"That buyer is that young, first-time home buyer, but now we're adding a new dimension to that which is the middle-aged, first-time home buyer; they're now coming into the market."

Like real estate prices in Whitehorse, where the average home sells for $300,000, the retail market is expected to hold steady in 2009, with sales of $530 million projected.

But tourism will take a hit, says the economic forecast.

In 2008, higher fuel prices and a strong Canadian dollar caused border crossings to fall nearly nine per cent to 299,860. This figure is expected to fall in 2009, but the forecast does not put a number on the anticipated decline.

Though construction activity will remain robust in 2009, outside of mining development, most of the projects are government-driven.

These include $56 million for improved roads and bridges, the $16-million expansion at the Erik Nielsen Whitehorse International Airport and the construction of a new public safety building in Whitehorse, with a price tag of $10.5 million.