ownshift from the estimated +5.4% gain in 2021 to +2.5% this year and +1.0% in 2023. That said, four key drivers will underpin the economy going forward.At the top of the list is exports. Year to date, they are up by +11.4% due in large part to strength in foreign sales of bus and truck tires , seafood , and fine paper , being shipped mostly to the U.S. Other countries contributing to the strength of Nova Scotia’s exports have include Hong Kong, the United Kingdom, France, and Germany.
Going forward, although the Bank of Canada, in its effort to rein in inflation, will cause interest rates to trend higher, residential building permits are up by +25%, due to plans to build both single-family and multi-family dwelling units. This increase signals sustained residential construction spending throughout the second half of this year and into the first half of 2023.
Private sector investment is projected to increase by just +3.7% this year after a +7.6% rise in 2021. The weak gain is in line with recent analysis by the Fraser Institute. Since 2006, the annual average percentage change of private sector investment in the province has been -0.3%, while public sector investment has increased on average by +5.1%.Major Project Inventory report highlights the relative strength in the outlook for public vis-a-vis private investment.
Headlining the health care projects are the Bayer Lake Outpatient Center and the IWK Health Centre expansion. Major electricity projects include the Mersey River hydro project and increased spending on the Eastern Clean Energy project. Two other large government projects which will boost employment in the province include the ongoing Irving Shipbuilding Arctic Offshore Patrol Vessel project and the shipyard’s contract to build 15 combat vessels for the Canadian navy.There is little doubt that the eroding impact of inflation on real incomes, slower growth of exports and rising interest rates will cool the Nova Scotia economy during the next several quarters.