State of the Region: New Brunswick

Posted on January 25, 2021 | By Stephanie Gough | 0 Comments

Change Point: Caught between declining revenues and increased expenses, New Brunswick stays focused on growth

The COVID curveball of 2020 caught governments around the globe off guard, upending economies and the best of fiscal intentions. New Brunswick was not immune, but she recovered well.

New Brunswick was the first province in Canada to re-open for business. By August, businesses had received $528 million from the Canada Emergency Wage Subsidy, helping to support 12 per cent of the workforce. By fall, employment was down just 3.5 per cent compared to 2019, with 38,700 jobs recovered over the low point in April. This was the smallest employment gap among Canada’s regions.

An early re-opening meant retail sales rebounded quickly. By August, they had increased 37.8 per cent over April, and by the end of the third quarter, they were nearly 104 per cent of February’s levels. Third-quarter results also showed building permits up 29 per cent over February, while the real estate sector was hitting records, especially in urban housing starts, which were up 21 per cent, with strong gains in Moncton and Saint John.

This is not to say the provincial economy went unscathed. The government expects an overall contraction of 4.3 per cent for 2020 (although TD estimates it could be as low as three per cent). Manufacturing and exports were hit hard, mainly due to heavy exposure to petroleum products production. Third quarter results showed manufacturing sales down 18.2 per cent and a decrease in international exports of 23 per cent. Food services, which are expected to recover more slowly, were operating at just 87 per cent of 2019 levels in August.

The pandemic also soured the government’s fiscal forecast. The deficit is projected at $183.3 million this year, instead of the $92.4-million surplus Premier Higgs had been hoping for, and net debt is forecast at just over $14 billion, up from pre-COVID projections of $13.68 billion.

Still, as a percentage of GDP, the deficit is among the lowest in Canada, and while undoubtedly frustrating for a government über-focused on fiscal discipline, N.B. has fared better than many of its peers. In November, New Brunswick’s year-to-date trade balance with the rest of the world showed a surplus of $648.1 million, a 13.3 per cent increase over 2019. And, according to the Atlantic Provinces Economic Council, the province was in a relatively strong fiscal position heading into the new year.

Sadly, this is all the proverbial potatoes/potahtoes.

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