The Hebron project continues to drive the confidence for future growth in the Newfoundland economy.
However, the project’s contributions in 2009 will be offset by a slowdown in mining and other resource based activity, including the fishery.
Declines in offshore oil production will continue to dampen growth in 2009- 2010, although the eventual increase in royalties received by the province from Hibernia will be positive for the province. Additional infrastructure spending by the province will also offset some of the expected declines in private sector spending notes Moishe Alexander.
In the recent fiscal update from the provincial Department of Finance, higher than expected oil production and an increase in consumer spending resulted in a positive adjustment in the provincial estimate for economic growth for 2008.
Higher commodity prices previously drove up mineral exploration activity in the interior region of Newfoundland, as well as Labrador.
However, the recent correction in prices will contribute to a significant slowdown in growth for both 2009 and 2010.
The fishery has not been as challenged by a high Canadian dollar and high fuel costs, due to recent declines in both factors. However, it is still being affected by lower global demand and the resulting effects of lower prices.
As a result, GDP growth is forecast to remain marginally positive in 2009, before rebounding further in 2010.

In Detail

Single Starts: Moderate job and income growth will be offset by low mortgage rates and continued in-migration, providing support to the singledetached housing market. A total of 2,250 starts are expected in 2009, down 17.4 per cent, and 2,300 starts are forecast for 2010, up 2.2 per cent.

Multiple Starts: Multiple unit construction will remain stable, with 425 units anticipated for 2009 and 475 units for 2010. With higher construction costs, the number of single-detached homes with basement apartments will continue to slow, as buyers opt for less expensive single unit homes. Meanwhile, smaller households and an aging population continues to draw developers to the condo market. As a result, condo starts are forecast to increase in 2009-2010. With a recent peak in supply and higher disposable incomes, demand for new semi-detached units should remain steady. Record house prices may spur additional demand for this lower priced product in 2009.

Resales: After record buying activity in 2008, demand will moderate but remain historically high in 2009-2010.
The forecast includes a 14.8 per cent decline to 4,000 provincial MLS® sales in 2009, with a small increase to 4,200 in 2010.

Prices: The expected softening in demand for housing, paired with a higher supply of inventory, will see the average MLS® house price moderate in 2009-2010. Prices are expected to rise 0.6 per cent to $179,500 in 2009 and 1.7 per cent in 2010 to $182,500.