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BMO Bank of Montreal

December 07, 2011 09:51 ET

BMO Economics: Saskatchewan Economy Expected to Post Fastest Growth in Canada in 2012

- Rebound in agriculture sector - crop production up nearly 9 per cent

- Resource sector activity strong

- Real GDP growth of 3.0 per cent in 2011; 2.9 per cent in 2012 (Canada's at 2.3 per cent in 2011; 2.0 per cent in 2012)

REGINA, SASKATCHEWAN--(Marketwire - Dec. 7, 2011) - Saskatchewan's economy sidestepped some early-year challenges in 2011 and is set to lead the country in 2012, according to the Provincial Monitor report released today by BMO Economics.

"Real GDP will likely expand 3 per cent this year, helped by a rebound in agriculture output, before cooling slightly to a league-leading 2.9 per cent pace in 2012," said Robert Kavcic, Economist, BMO Capital Markets. "Much better growing conditions during the summer helped the sector, and agriculture exports were up more than 16 per cent year-over-year through September. Overall crop production should be up nearly 9 per cent in 2011, according to Statistics Canada estimates, with good-to-excellent quality reported."

Broader resource-sector activity remains robust. "Potash production was up 25 per cent year-over-year through September, and the sector will continue to support growth in Saskatchewan. BHP Billiton's Jansen mine is on track to begin production in 2015, and the company is actively exploring more mine sites. Meantime, K+S continues to invest an estimated $2.5 billion to develop its Legacy Project, which is also expected to begin producing in 2015. Exploration activity in the oil & gas sector is also strong in the Bakken, and the Province is expecting 4 per cent annualized growth in oil production through fiscal 2013-2014," noted Mr. Kavcic.

Commodity-sector investment is supporting the labour market and driving wage growth. "The province's unemployment rate has averaged just 4.9 per cent through November, while average weekly earnings are up a firm 4.8 per cent year-over-year, even as the national average has cooled significantly," said Mr. Kavcic. "Solid job prospects and relatively low living costs should continue to drive population growth, and combined with a modestly lower tax burden, will support consumer spending and the housing market. Retail sales are up more than 7 per cent year-over-year through September, the fastest pace in the country."

"Saskatchewan continues to be a very attractive place to live, work and invest," said Mike Darling, District Vice-President, Saskatchewan, BMO Bank of Montreal. "With a solid economic and fiscal foundation, we are seeing strong demand for labour, robust consumer confidence, and businesses that are investing and building for future growth - not just in the resources sector, but across the entire spectrum."

Saskatchewan's second quarter fiscal update decreased the fiscal 2011-2012 surplus estimate to $25 million (0.5 per cent of GDP). Saskatchewan is one of only two provinces (the other being Newfoundland & Labrador) on track to be in the black this fiscal year, and the only one projected to remain there over the medium term.

The full Provincial Monitor can be downloaded at www.bmocm.com/economics.

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