Saskatchewan 2010 – Strongest Economic Rebound in Canada

As 2009 is now behind us and in the history books, our attention naturally shifts to the future.

As we look across the Canadian real estate industry into 2010, there are clear indications that several provinces in Canada will stand out above the rest. The province of Saskatchewan appears to be the most promising of all.

Many people think of Saskatchewan as the breadbasket of Canada, but a poor province with miles and miles of wheat fields on the prairies. Well, yes it has wheat. The economy of the province was always dominated by wheat in the past. It was viewed as a have-not province. But the economy of the Saskatchewan of today is much more diversified than many people realize.

The Saskatchewan premier in a December 30, 2009 article of The Globe and Mail newspaper recently addressed this:

Premier Brad Wall tells the whole story well: “I think every now and then, Saskatchewan people have thought to themselves or maybe had a coffee conversation that went something like: ‘How is it that the place that has half of the arable acres in all of Canada, that boasts a quarter of the world’s uranium production, that has a third of the world’s potash production, that is Canada’s second-largest producer of oil and third-largest producer of natural gas, that is responsible for 25% of the world’s mustard production and a third of most of the pulse crops-how is that province a have-not province?”

Well, obviously things have changed for Saskatchewan. Wheat is still important but it has been joined by oil, natural gas, uranium, and potash. There is even potential for diamonds and an “Alberta-like” oil sands development in northwestern Saskatchewan in the not too distant future.

The article goes on to say:

The province produced 160 million barrels of crude oil last year, second in Canada only to Alberta’s total output and about equal to that province’s production of conventional oil (in other words, once the oil sands are put aside). Saskatchewan is the world’s top producer of uranium, accounting for about a quarter of total production. And then there is potash, which modern agriculture relies on for a basic nutrient (potassium), and which Saskatchewan calls “pink gold.” The last provincial budget forecast that potash revenue would account for 18% of government revenue.

The accolades for Saskatchewan are not new. This is a province that can boast some staggering facts.

• The world’s largest producer of potash, with 10 operating mines.
• The world’s largest producer of uranium with ¼ of the global output.
• Sufficient potash reserves to supply the world’s needs for several hundred years.
• Enough current uranium deposits to last 40 years without new discoveries.
• Second largest Canadian crude oil producer.
• Third largest Canadian natural gas producer.
• Third largest Canadian coal producer.

Not only does the province have an abundance of natural resource wealth, but it’s two major cities Regina and Saskatoon are also highly competitive in overall business costs according to the most recent KPMG’s guide to international business costs survey.

So how did Saskatchewan react to the “2008 Global Financial Crisis”? Well according to the Saskatchewan government news release of March 18, 2009, the province simply “delivered the largest education property tax cut in Saskatchewan history with the 2009-2010 budget.” Then they sweetened the pot by delivering another $1 billion in economic stimulus to build provincial infrastructure.

However, things did not go according to plan. On August 14, 2009 the government issued its first quarter financial report. It detailed that the province was not immune to the massive negative external shock that was rippling through the world. Measures were put in place to deal with a massive $1.3 billion reduction in provincial potash revenue. Suddenly, Saskatchewan joined the rest of Canada with a contracting economy estimated at –1.1% to –2.0% depending on the source.

However, in 2009 it was not an exclusive club. Every province and territory in Canada is expected to have “Negative Real GDP” growth for 2009.

So, yes Saskatchewan was affected by the worldwide downturn. It is hard to find a developed area of the world that escaped unscathed from the worst recession since the Great Depression. But it looks to have weathered 2009 with remarkable resilience and the future now looks bright.

The prospects for Saskatchewan in 2010 seem to be extremely positive across the board. Real GDP growth is now forecast to be between +2.3% to +3.9% for 2010 depending on the source. However, the universal consensus is that Saskatchewan will record the best Gross Domestic Product (GDP) growth rate in Canada for 2010.

Saskatchewan looks to be poised for the strongest economic rebound in all of Canada for 2010.

The Saskatchewan real estate market will naturally react very favorably to a stronger provincial economy. CMHC (Canada Mortgage and Housing Corporation) is now forecasting a 20.8% increase in new home starts for 2010. While the RE/Max “Housing Market Outlook for 2010” forecasts a 5% increase for home sales in the province for 2010.

Overall the Saskatchewan real estate market has nothing but positive future indicators. A continued low interest rate policy in Canada, low provincial unemployment and high potential job growth will all contribute to further strengthen the Saskatchewan real estate market in 2010.