Saskatchewan to lead in economic growth as potash industry rebounds: Deloitte

by Angela Amato

Regina Leader-Post

Although 2023 wasn’t the finest year for Canada’s economic growth, experts say Saskatchewan stood out compared to the rest of the country and is expected to be a leader again in 2024.

“This year won’t be quite as robust as in other years, but Saskatchewan does stand out in terms of having some positive momentum, especially compared to the national average,” said Dawn Desjardins, chief economist for Deloitte Canada, in an interview Monday.

A major contributor will be a rebound in the potash industry as a result of BHP’s Stage 2 expansion of the Jansen potash project, Desjardins noted, pushing Saskatchewan’s economic growth to 1.1 per cent in 2024 — more than double the national average.

In October, BHP approved a plan to spend $6.4 billion for the second stage of the mine, making it the next step in the company’s ongoing development of what will be the largest potash mine in the world once complete.

With the province seeing record-high population growth, Desjardins said that this will help Saskatchewan to stay high in the ranks in terms of prosperity as employment rates increase. She also noted Saskatchewan residents have less household debt compared to other provinces like Ontario and British Columbia.

“One of the things I would say is a positive factor that perhaps mitigates some of the impact of higher interest rates for Saskatchewan is the fact that household debt relative to incomes is relatively low,” said Desjardins.

Nationally, Deloitte’s forecast sees modest job growth but substantial increase in wages. As the year progresses, wage gains are projected to slow, while job growth accelerates, maintaining consistent income support. The overall forecast suggests a 5.5 per cent growth in primary household incomes this year.

Canada’s unemployment rate is expected to stay at or above six per cent throughout the year.

Deloitte’s Economic Outlook report “predicts that the Bank of Canada will begin rate cuts when the path to the two per cent target is clear,” which is anticipated as early as this spring.

In 2022, Saskatchewan led provincial growth charts with a six-per-cent GDP. Due to poor crop conditions, the provinces growth dipped down to a mere 0.9 per cent the following year. Now, with potash exports anticipated to increase, the land of living skies is predicted to have a GDP boost compared to the rest of Canada.

“Nationally, we are looking for growth to be only less than half a percentage point,” said Desjardins. “So it is a modest year for economic activity.”

Deloitte predicts that the first half of 2024 will be relatively stagnant for the country in terms of economic performance.

“Real economic growth is anticipated to experience a significant surge during the last two quarters, culminating in an average annual growth of 0.4 per cent for the year,” said a statement from Deloitte.

As 2024 begins, the report says that the major wild card in the economic outlook continues to be interest rates and how households and businesses manage high borrowing and debt-servicing costs.