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APEC Atlantic Report: Stimulus Boosts Major Project Spending in 2010, But Investment Could Weaken in 2011 Date: June 8, 2010 St. John's, NL – Current year spending on major projects in Atlantic Canada is up about 13% in 2010 largely due to public stimulus, according to the Atlantic Provinces Economic Council's 27th annual Major Projects Inventory. But what happens to private spending in the region as the stimulus funding begins to wind down in 2011 remains a key question. The 2010 Inventory, which tracks 343 of the region's largest investment projects valued at $72 billion, was released today in conjunction with the latest issue of APEC's Atlantic Report.
"Government stimulus spending on project activity increased 32% in 2009 and is expected to grow an additional 20% in 2010," said APEC Senior Economist David Chaundy. "The largest share of the increase in public spending went to transportation, while broad infrastructure programs and education also received significant funding."
The effects of the global recession on private investment are clearly evident. Some substantial projects have been cancelled and removed from the inventory (such as the $8-billion refinery project in Saint John and the $5-billion petrochemical plant in Nova Scotia). Other projects have been delayed or experienced reductions in spending.
Private sector investment has fallen for the second consecutive year in Prince Edward Island and New Brunswick due to the completion of various projects. However, private spending increased in Newfoundland and Labrador (due to higher spending on offshore projects and the Vale Inco nickel processing facility) and in Nova Scotia (due to spending to meet government renewable energy targets).
"The critical issue is whether the private sector will pick up the slack as stimulus spending starts to wind down in 2011," said Chaundy. "Private investment spending is expected to boost total major project investment in Newfoundland and Labrador next year. But overall spending is currently expected to be weaker in the three Maritime provinces. This regional divergence in investment spending could be a pattern that continues for years to come."
Major Projects Inventory at a Glance
Key points from the Atlantic Provinces Economic Council's 27th annual Major Projects Inventory:
Newfoundland and Labrador Key Points: · APEC identified 90 projects totalling $37.6 billion, down 5% over last year's Inventory. · The decline in total value is largely due to the removal of two large projects that were at the proposal stage (a $2.5-billion Labrador Wind Farm and the $1.7-billion fixed link); this was partially offset by an announced value for the Hibernia Southern Extension ($1.74 billion). · Current-year spending is up 20% in 2010 to $4 billion. · The rise in current-year spending is mainly due to higher spending in the offshore sector and at the Vale Inco processing facility, along with rising transportation spending. Nova Scotia Key Points: · APEC identified 119 projects totalling $14.5 billion, down 32% over last year's Inventory. · The fall in total value is largely due to the cancellation of a proposed petrochemical plant ($5 billion). · Current-year spending is up 17% in 2010 to $3.2 billion. · The rise in current-year spending is due to increased investment on renewable energy projects and further growth in public infrastructure spending. New Brunswick Key Points: · APEC identified 97 projects totalling $17.7 billion, down 27% over last year's Inventory. · The fall in total value is mainly due to the decision to cancel an $8-billion oil refinery project in Saint John. · The value of current-year spending is up 2% in 2010 to $2.75 billion. · Current-year spending rose on strong growth in public investment and spending at the potash mine in Sussex. This offset lower spending in manufacturing and electricity industries. Prince Edward Island Key Points: · APEC identified 37 projects totalling $1.9 billion. This value is down 16% over last year's Inventory. · The fall in total value over last year is largely due to the completion of the West Cape Wind Farm ($220 million) and the removal of a proposed resort development. · Current-year spending is up 7% in 2010 to about $374 million. · An increase in current-year spending is due to higher spending on public infrastructure. For a copy of the Atlantic Report or to arrange an interview, please contact: Donal Power, APEC Communications Coordinator
w: 902-422-6516 ext. 229
c: 902-719-0123
www.apec-econ.ca |
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