State of the Region: Nova Scotia

Posted on February 01, 2021 | By Richard Woodbury | 0 Comments

Can it rebound? Nova Scotia had a strong economy before COVID-19. Amid mixed economic signals, the province is working to get back on track

Things appeared to be so good.

In late February 2020, Nova Scotia had tabled its fifth consecutive balanced budget, its population and exports were at all-time highs, unemployment was low and the province’s credit rating had never been better. “For the first time in my lifetime, our population had gotten younger,” said Premier Stephen McNeil. “We were moving in a very positive direction.”

Everything changed on March 15 when the first three cases of COVID-19 were announced. Then more cases were identified and a lockdown was implemented. By late July, the province was anticipating an $853-million deficit, rather than the $55-million surplus it was projecting just five months before. “This has impacted the revenue of the province, the bottom line of the province in a way that I don’t think any of us could have predicted,” says McNeil. A financial update was planned for the end of December and it was likely the projected deficit would increase.

An RBC Economics provincial outlook from September noted an $853-million deficit represents about two per cent of the province’s expected GDP. “While this is by far the largest ever recorded by the province in dollar terms, it is one of the lowest as a share of GDP among the provinces,” it said. RBC projected real GDP would be down 5.1 per cent in 2020 but rebound 4.8 per cent in 2021.

Nova Scotia—along with the other Atlantic provinces—has fared better than other parts of the country in its handling of COVID-19, which also meant the economy reopened quicker than most other provinces. As of late November, the reopening has been cautious, striking a delicate balance between having measures to contain the spread of the coronavirus, while allowing people to have some freedoms.

But as gloomy as things have been, the province’s situation pre-COVID is helping fuel optimism for how the economy comes out of it. “I think the hard work that Nova Scotians have been doing prior to COVID puts us in a good fiscal position to rebound,” says McNeil.

Warning signs
The Conference Board of Canada strikes a less optimistic tone than the premier.

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