The Yukon's economic forecast predicts a boost in the average unemployment rate for 2012, after seeing a drop between 2010 and 2011.

The rate is expected to rise to between 6.5 and seven per cent from 5.4 per cent in 2011. It stood at 6.9 per cent in 2010.

The labour force is forecast to expand faster than employment opportunities, causing the rise in unemployment.

"Last year's average of 5.4 per cent was really, really low. That's well below the Canadian average, well below historic averages,” Currie Dixon, the Minister of Economic Development, told the Star recently.

"Seeing it go up a little bit is probably a return to normalcy more than anything,” he said.

"The priority for us is to ensure that the economy continues to grow and that there continue to be jobs available,” said Dixon.

The Yukon's real gross domestic product is expected to climb in 2012 by three per cent due mostly to an increase in mineral production.

Statistics Canada estimates theYukon's 2011 real GDP grew to $1.776 billion from $1.681 billion in the previous year, a hike of 5.6 per cent.

The forecast predicts the value of mineral production in the Yukon to escalate to $600 million, up from $402 million in 2011.

Beefed-up production at the Wolverine mine, which began commercial production in March, is primarily credited for the growth.

Mineral exploration spending is also expected to rise this year to between $160 million and $200 million, "the second highest level on record,” according to the forecast.

Oil and gas production at the Kotaneelee natural gas field in southeast Yukon continues to decline as it nears the end of its life-cyle.

The futures of both the Alaska Highway Pipeline Project and the Mackenzie Gas Project remain uncertain as development of shale gas in the U.S. has depressed the price of natural gas and reduced the need for gas from Alaska.

But, the forecast document says, the government will "continue to evaluate the possibility of utilizing local gas resources to meet Yukon's current and future energy demands.”

Jan Stick, the NDP's critic for economic development, said the outlook is "fairly rosy.”

But she expressed concern about a lack of economic diversification.

"It's pretty much looking at, I thought, mining and what it's going to bring to the Yukon.”

Dixon said, considering the economic uncertainty in the global market, the natural resources sector will continue to be the backbone of our economy.

The demand for mineral resources from growing economies will persist, he said, noting demand from emerging economies in Asia.

"That being said, of course we have to diversify,” he said. "But there's a diversification that can occur within the mineral industry as well.

"If we've got several mines, mining several different things, you've got a diversified mineral industry,” he said.

"Of course, we're going to diversify outside the mineral resources industry, but I think you can diversify within the mineral resources industry as well.”

Dixon said the tourism and research and development industries will be key components to diversification outside of mining.

"I think we've got a tremendous opportunity to develop the knowledge economy in the Yukon,” he said.

"The (information and communications technology) sector is consistently a significant contributor to our GDP. It's usually around four to five per cent of our GDP, but it's a four to five per cent upon which all the other industries are based on,” said Dixon, noting that everyone needs Internet, phone services, etc.

Tourism has remained steady in the Yukon since 2010. Border crossings are expected to rise slightly this year to 313,000 from 310,000 in 2011.

But high oil prices and a strong Canadian dollar have the potential to negatively affect tourism numbers this year, according to the forecast.

A strong Canadian dollar against the U.S. dollar raises the relative cost to Americans travelling in Canada.

The construction industry is expected to remain healthy in 2012, even as the value of building permits is expected to drop to $150 million from 2011's record value of just more than $170 million.

The forecast does say the 2012 level is still above the long-term average value of building permits.

Due to a "strong local economy,” retail sales are expected to climb by four per cent in 2012 to $690 million.

In 2011, retail sales were valued at $662 million, an increase of 10.6 per cent from 2010.

The inflation rate in Whitehorse is forecast at 2.5 per cent, slightly lower than the three per cent in 2011.

"This forecast represents the expectation that oil prices will likely continue to be strong throughout 2012 ,” the report says.

Stick is also concerned about the state of the global economy, noting that there were a few warning signs in the report.

"There are certainly concerns about what's happening in Europe and we hear on the news today about Spain possibly being the next country needing a bailout,” she said.

Dixon said economic uncertainty in global markets is always a concern, but that the Yukon is well-positioned to withstand it.

"It just highlights the need for us to continue to manage the economy effectively, and it puts a greater highlight on the need for us to be fiscally responsible,” he said.

He said despite the uncertainty, the Yukon's economy is still positioned to experience growth.

While Stick thought the report contained some positive indications in her position as NDP critic of economic development, as the critic for the Department of Health and Social Services, she had one more concern.

"Putting my other hat, social services, for a minute, I still don't see that everyone's benefiting.

"We're still not addressing bottom issues, homelessness, poverty,” she said.