We now have evidence economic circumstance in the region has begun to improve

For decades the economic news in Atlantic Canada has been mostly unfavourable.

The region has consistently trailed the economic performance of the rest of the country in terms of GDP growth. For the last five decades, Atlantic Canada has become proportionately less important economically relative to the country as a whole. Over the same period, Atlantic Canada has shrunk as a percentage of the Canadian population from about 10 per cent in 1971 to 6.5 per cent in the last census. The lack of population growth at the national rate has contributed to an under-performing economy in Atlantic Canada over a long period of time.

We now have concrete evidence that the economic circumstance within the region has begun to improve and track more closely to the rest of the country. One of the key reasons for this improvement is related to population growth in the Maritimes which now tracks at the national level for the first time in living memory. Population growth still lags in Newfoundland and Labrador.

EARLY SIGNS OF SUCCESS

Atlantic Canada has had the dubious honour of leading the country in terms of unemployment rates for decades. Part of the challenge in the region is the disproportionately higher percentage of the population living in smaller rural areas without an economic base to provide yearround employment to their residents. Lower population growth over decades meant that Atlantic Canada was much slower to urbanize its population than elsewhere in the country. Indeed, the region has more than twice as many living in rural communities compared to the country overall. This is now changing.

Prior to the recent increase in population growth, there was evidence that unemployment rates were beginning to decline in the region as the labour force began to shrink due to an aging population and fewer people looking for work.

But now, unemployment rates continue to abate in the region while the labour force is growing, driven by increasing population growth.

Unemployment rates have been falling across the region in the last five years, led by Prince Edward Island (11.3 percent in April 2018 versus 6.3 per cent in April 2023). Unemployment numbers for the region compared to the national rate indicates the region has outperformed the country in terms of lowering its unemployment rate.

Over the same period, the Island has also led the region in per-capita full-time employment growth, growing full-time jobs an unprecedented 19.5 per cent. It is worth noting that both P.E.I. and Nova Scotia exceeded growth in full-time employment for the country. This is a real sign of economic progress in the region and further evidence that population growth is critical to economic growth.

Another concrete measure of economic progress is population growth across the region which until recently has trailed the rest of the country for decades. In fact, only Newfoundland and Labrador is below the national growth rate, while the Island has led the country in growth over the last five years.

ATLANTIC MOMENTUM INDEX

The Public Policy Forum (PPF) recently released its inaugural Atlantic Canada Momentum Index to measure the economic progress in our region. This is part of PPF’S Atlantic Initiative to build a “sustainable, technology-based knowledge economy to increase living standards for all Atlantic Canadians.”

The Ottawa-based Public Policy Forum, founded in 1987, is an independent, non-partisan and non-profit organization led by Ed Greenspon, its CEO and the former Editor of the Globe & Mail.

Cathy Bennett, business entrepreneur and the former Finance Minister in Newfoundland and Labrador and Laurel Broten, now the CEO of Invest in Canada and the former CEO of Nova Scotia Business Inc. (now Invest Nova Scotia), are members of its Board of Directors.

Ed was a recent guest on our Insights Podcast and talked about how the success of the Atlantic Bubble during the pandemic initially drew the attention of his organization to the region and led them to further investigate what was happening in our region. This ultimately led to the development of the Atlantic Momentum Index (www.ppf.com) .

It is perhaps important to note that it is rare for a national think tank like PPF to focus any attention on Atlantic Canada and is a tangible signal that real change is in the air in our region.

As stated in a recent release, “the East Coast of Canada is experiencing a moment. Now it is critical to define what the opportunity will be, and how the region can capitalize on it.”

It is also critical to ensure that public policies are aligned with what is needed to take advantage of this momentum, especially those related to the regulatory processes. The recent withdrawal of the tidal power company Sustainable Marine due to regulatory issues is an example of a momentum killer.

ECONOMIC MEASURES

The Atlantic Momentum Index is based on 20 economic and social measures under five separate categories including Quality of Life, Human Capital, the Marco Economy, the Labour Market and Innovation and Investment. The performance of these measures since 2015, compared to 2008-2015, indicates significant progress and growing momentum within the region. It should be noted that the Index is not actually an Index as all measures are weighted equally and it should be evident that some factors are significantly more important to the future of the region than others.

Nonetheless, PPF does a good job identifying those areas where improvements have been made and those that require more work.

Among the most important improvements for the region noted is the narrowing gap in nominal GDP capita. In 1961, nominal GPD per capita in Atlantic Canada was only 59 percent of the national average. The nominal GDP per capita had risen to 87 percent of the national as of 2021.

In addition to measures like population growth, the Index includes other human capital factors like immigration retention rates that have steadily increased in recent years. In a comparison with the rest of Canada, Atlantic Canada has improved on 14 of the 20 factors measured over the study period, with PEI leading the way with improvement on 17 factors.

One weak area that has been improving for the region is business research and development spending but still represents only 35 percent of the national average.

Another encouraging measure is related to housing starts which increased by an average annual rate of 8.4 percent between 2015 and 2022.

One measure of concern in the Index relates to access to a family physician which indicates improvement in accessibility nationally but not within Atlantic Canada.

A TIME FOR OPTIMISM

For the first time in living memory, there is a real sense of positive change and economic momentum in the region. It is not at this point consistent across the region or within each of the four Atlantic Provinces and the challenge will be to ensure that the progress is more equally shared across all parts of the region.

Nonetheless, there are growing signs that the rest of the country has been awakened to the opportunities and quality of life advantages that are available within the region. Having the attention of national organizations like the Public Policy Forum lends credence to the economic progress being made and should contribute to growing confidence in the future of Atlantic Canada.