(By Joanne Paulson)

In the third week of October, the Conference Board of Canada forecasted that Saskatoon’s real GDP growth would likely outpace that of all other major Canadian cities in 2022.

It predicted a 7.2 per cent GDP increase this year, and 3.9 per cent in 2023.

The recent bounce comes after years of flat economic growth, following the 2014 commodity crash and subsequently COVID: real GDP was 4.7 percent lower in 2020 than in 2014, said the board.

While one might expect a rebound after the serious economic retreat caused by COVID, that’s not what’s driving our suddenly soaring fortunes.

Rather, the Russian invasion of Ukraine has changed the global economy and that has caused fundamental changes to the Saskatchewan economy, said Alex Fallon, president and CEO of the Saskatoon Regional Economic Development Authority (SREDA), in an interview.

Key economic sectors in Russia and Ukraine are energy and agriculture, and both of those sectors are also tied to mining. Think potash for fertilizer, for example.

Fallon said the invasion will lead to huge and potentially long-term consequences as other nations, particularly in Europe, seek new energy suppliers, as well as food sources.

“That’s driving this seven percent. The forecast could actually be low,” Fallon said.

While no one wants war, the economic effect has been considerable and Saskatoon-based companies are responding to global needs. For example, Cameco Corp. has seen significantly more interest in its uranium from countries who will no longer deal with Russia and its energy supply.

Cameco’s confidence in the rebound of nuclear energy, which started before the invasion, led to its recent half-stake purchase of Westinghouse Electric Co., a major American nuclear company that manufactures fuel and provides services to nuclear plants worldwide.

Agriculture, potash and uranium “are three of the biggest drivers of the economy and what we’re seeing for the first time in a while . . . is all three are growing at the exact same moment in time,” Fallon said.

They are growing in terms of volume, “but also in terms of the price because of what’s going on in the world.”

Oil and gas production is also rebounding, even as the newer helium sector is growing. Additionally, the massive mining company BHP has finally sanctioned its Jansen potash mine east of the city. Industry watchers think an influx of engineers and other BHP staff may be on the horizon.

All economic activity comes with its own stresses, however, Fallon said.

“On the other side, you have inflation and a tight job market but that actually leads to growth, often.”

Labour is indeed an issue for many businesses. Fallon noted that the Saskatchewan workforce — those working and those available for work — numbers 596,000, which is really quite small.

“That’s a tiny population . . . and so that’s pushing up wages; that’s why our employment numbers are almost at record levels.

“It is extremely, almost harder than ever, to find employees.”

That’s tough on business but it increases wages, because employers pay more to hire and keep people, he said.

“What happens because of that is people spend more. That turns into economic growth. But it pushes prices higher, and you get onto the inflation side.”

A tight labour market never lasts forever, because people who need jobs will go elsewhere to find work, including Saskatoon. People will immigrate or migrate here from other parts of Canada, and at some point the labour problem will ease.

He added that to some extent, the awareness of a strong economy is a self-fulfilling prophecy.

“The biggest economic indicator to me is consumer confidence. Now you’ve heard seven per cent, you’re more confident. Saskatchewan is leading the nation in economic growth, my job is great . . . I’m going to buy this new car for my daughter. That is a real thing. That has a real impact on the economy.”

The Conference Board reported that per capita household income is up nearly $10,000 since 2019 to $58,106, which is a clear indicator of increased consumer spending.

Fallon said that generally he feels that the board’s numbers reflect reality. “The Conference Board of Canada is a well-established and major think tank on the economy, so (we) certainly play close attention to their numbers.”

• Joanne Paulson