Conference Board upbeat about northern economy

The northern territories will likely bounce back from the recession and post economic gains this year, according to the Conference Board of Canada's first-ever forecast for the North.

The economic forecasting organization released its Northern Outlook on Monday, predicting that Nunavut and the Northwest Territories will rebound from declines in the mining industry last year.

In Nunavut, Agnico-Eagle Mines Ltd.'s Meadowbank gold mine near Baker Lake is expected to reignite that territory's economy when it begins production this year, according to the outlook.

As a result, the Conference Board is predicting Nunavut's economy will grow by nearly 10 per cent, after it slumped last year as construction of the mine wound down.

Diamond production recovery

The global recession led to less demand and lower prices for diamonds from the Northwest Territories in 2009, resulting in a nine per cent drop in gross domestic product last year.

But analysts with the Conference Board say rebounding diamond prices from India and other parts of Asia will result in a 1.5 per cent increase in the N.W.T.'s gross domestic product in 2010.

"We're forecasting to see a recovery in production in 2010. I think we're already seeing a little bit of an improvement in diamond mining," Marie-Christine Bernard, the Conference Board's associate director of forecasting, told CBC News on Monday.

Bernard added that the Diavik diamond mine's transition from open-pit to underground operations will give a boost to the industry this year.

Pipeline may not go ahead until 2017

But the Conference Board's predictions look less favourable for the N.W.T.'s oil and gas industry, as it predicts prices to keep plunging and production to continue a steady decline.

The Conference Board's outlook predicts that the Mackenzie Valley pipeline, if approved by regulatory bodies, won't go ahead until 2017.

By then, analysts say commodity prices would be high enough to make the pipeline economically viable.

Investment in the N.W.T. is expected to drop by 19.1 per cent this year. The territory saw a 20.6 per cent drop in investment in 2009, according to the outlook.

Yukon dodges recession

Meanwhile, the Yukon mostly dodged the recession last year because it has a large government workforce, Bernard said, adding that the territory's economy actually grew by 1.5 per cent in 2009.

"Large fluctuations are rare in the public sector or are not as common as in the primary sector," she said. "So yes, that would have been one reason that would have helped Yukon see some positive growth for 2009.

"Looking ahead for 2010, we are forecasting that the territory will advance by four per cent."

Bernard said the Yukon's economy will grow, thanks to Yukon Zinc Corp.'s Wolverine mine, which is expected to begin production this year, as well as coming government-funded infrastructure projects such as construction of a new jail in Whitehorse.

The Conference Board, which has been making economic predictions for the rest of Canada for more than 29 years, has started issuing forecasts for the territories as part of its new Centre for the North.

Officials with the Conference Board, a non-profit research organization focusing on economic trends and public policy, have said there often is not enough information that can be used to make decisions about the North.

Bernard said the Northern Outlook will be revised again in May, and the North will be included in the Conference Board's other financial forecasts.