Offshore oil pumping St. John's economy: report

St. John's can expecta robust economy this year and probably for years to come, according to the latest economic development report from the city.

The economic development department saidthe offshore oil industry will continue to be a key driver, with gains also coming from financial services, real estate and retail sales.

Retail spending for 2007 is expected to increase by almost three per cent, to about $2.7 billion, according to the city's latest projection, released earlier in June.

The city is expecting overall economic growth of about 9.4 per cent for 2007.

"A substantial number of the oil and gas industry workers live and/or work in the metropolitan area, and a lot of the services [supplied] to the offshore oil industry emanates from the St. John's metro area, so that's really how the contribution comes back," said Elizabeth Lawrence, the director of economic development of the City of St. John's.

With three fields in production, the offshore oil industry has had a major impact on the provincial economy. Within a few years, the Newfoundland and Labrador government's budget has moved from a deficit to a surplus position.

Lawrence said while there have been concerns that the local economy has become too dependent on oil, there is plenty of evidence that the rest of the economy is strong, too.

She noted that if the offshore oil industry was factored out of the growth projection, the city's economy would still be growing by 3.4 per cent.

"The fact that we are seeing healthy to moderate gains in other goods and services-producing sectors is very healthy," she said.

The unemployment rate in the city's metropolitan area is expected to drop to about 7.5 cent. In 2005, the rate was 8.9 per cent.