The Northwest territory’s economic outlook is worse than Yukon and Nunavut according to a new analysis from Canadian Northern Economic Development Agency.
A declining mining sector and a tourism sector decimated by COVID-19 were cited as the biggest reasons for decline in the territory’s economic fortunes.
“Even before the pandemic, real GDP in the territory was forecast to fall throughout much of the medium term, due largely to weakness in the global diamond industry,” the report read. “The territory’s diamond production has likely passed its peak, as indicated by mining plans issued for Gahcho Kué, Diavik, and Ekati.”
This could result in more than 730 job losses — in addition to the round 4,000 lost already during the pandemic.
The job losses aren’t as bad as they could be, according to the report, because the decline in the mining sector will hurt the gross domestic product (GDP) — the value of everything the territory produces — more than it will hurt job numbers.
The territory’s economy could shrink anywhere from 6.8 to 8.7 per cent. If the drop ends up being 8.7 per cent, it would be the biggest decline in the past decade.
The report does expect a recovery in 2021, but it ranges from a 4.9 per cent to a “meagre” 0.5 per cent recovery in GDP.
NWT’s situation is in stark contrast to the picture in Nunavut, whose GDP is expected to grow during 2020 despite the pandemic, fuelled by their gold mining projects, which comprises a third of the territory’s economy.
Yukon is in a similar situation to Nunavut, with growth in the mining industry boosting growth in its overall economy.
Infrastructure is set to be a big part of the GNWT’s plans for its economic recovery in 2021. Finance Minister Caroline Wawzonek laid out plans for $451 million in capital projects for the 2021-22 budget back in November.
“As Northerners, we are resilient, and our government is committed to investing in our people and businesses,” Caroline Cochrane, Premier of the Northwest Territories. “This is one of the largest capital investments in the history of the territory, and we acknowledge that the health and well-being of all communities and residents is best served by maintaining a stable economic environment.”