Economic outlook: Nunavut poised for growth
“But will the people of Nunavut benefit?”
A new five-year economic forecast for Nunavut predicts that the territory is about to enter a period of sustained economic growth over the next five years, mostly due to a big leap in private sector investment.
But they warn that if the people of Nunavut are to share in all the new wealth that’s expected to be created, Nunavut leaders have a lot of work to do.
“If Nunavut is to have a growing, modern economy, its population will have to be ready, willing and able to participate in it,” the report’s authors say.
The report, called the 2005 Nunavut Economic Outlook, was produced on behalf of the Nunavut Economic Forum, who released it in late October. It’s written by economists Graeme Clinton and Stephen Vail, who work for a Yellowknife consulting firm called Impact Economics.
They’re the same consultants who in 2001 produced Nunavut’s first five-year economic forecast, released by the Conference Board of Canada.
The consultants found that in the past five years, Nunavut’s economy has expanded rapidly, mostly due to government spending, growing by an average of 6.3 per cent annually since 1999.
But over the next five years, the influence of government spending will lessen, and the influence of private sector investment, especially from mining companies, will increase.
Because of this, Nunavut’s GDP – or “gross domestic product” – will grow by 5.6 per cent in 2005, and by an average of 4.7 per cent a year between now and 2010. That’s almost twice as fast as Canada’s economy is likely to grow every year in the same period.
And they warn that Nunavut leaders must not only do more to improve social conditions, health and education. Political leaders must also be prepared to make tough policy decisions on where to spend government money and to clarify Nunavut’s priorities.
“This will involve leadership making tough choices on behalf of the territory in balancing economic, social and cultural objectives. These decisions are critical to the long-term prosperity of all Nunavummiut,” the authors say.
They say, for example, that Nunavut’s political leaders have not clarified the role of Inuit culture in economic development.
And they point out that fisheries and mining development have gone forward without much regard for Inuit culture.
And Nunavut leaders must also make hard choices about where to invest scarce government dollars, and may have to choose between spending on economic or social priorities.
“Strong leadership will be essential in ensuring the newly formed wealth is shared amongst all Nunavummiut. How this can be accomplished is not obvious,” the report says.
But human development still remains the biggest challenge.
“Participation of Nunavummiut is the key to this forecast,” their report says.