I see TD was in Moncton yesterday predicting that New Brunswick’s GDP will increase to 1.5 percent next year after running at 0.5 percent this year. Later in his speech he talked about how the province’s population will be in decline between here and 2021.
I continue to come back to the fundamental question – maybe the chimera – what level of economic growth does NB need over the next decade and what, if anything, can we do collectively, to influence that rate of growth?
I can’t get anyone to commit to a number. Is it 2 percent per year? Three percent? Four?
A decade ago we could at least expect 1.5 to 2 percent real GDP growth in an average year. Since 2008, it has averaged around one half of one percent. I contend that New Brunswick’s economy will be highly unstable at a long term growth rate of under one percent. By this I mean it will be virtually impossible to balance the provincial books, keep a good quality of public services and limit outward migration of workers. I suspect if anyone actually crunched the numbers we likely need in the range of 2.5 percent per year when all things are factored in.
And this population issue. How can you have moderate GDP growth with a declining population when 60% or more of your economy is related to household spending? It seems to me virtually impossible to have strong GDP growth in a declining population environment – unless you are Newfoundland and are pumping massive oil and plowing billions into a tiny economy each year.
We need to get some fundamentals right and then we need to have a long conversation with New Brunswickers.