Former Economist Warns New Brunswick of Growing Trade Deficit
New Brunswick faces a significant economic challenge as the province grapples with a ballooning trade deficit, according to a former chief economist who argues that addressing this imbalance is paramount to the new Liberal government’s success. David Campbell, who authored a recent report on New Brunswick’s export economy, emphasizes that the province’s trade deficit, now exceeding $8 billion in 2022, represents a critical issue demanding immediate attention. This deficit highlights a troubling trend – the outflow of money from the province far outweighs its exports, contributing to a decline in New Brunswick’s economic potential.
The state of New Brunswick’s economy is deeply concerning, with imports surpassing exports by a staggering margin. This trade imbalance has persisted for over four decades and coincides with a period of stagnant economic growth, characterized by an average private-sector growth rate of only 0.5 per cent over the past 17 years – a stark contrast to the 3.3 per cent growth seen during the previous 10 years under Conservative rule. Campbell’s report underscores the need to reignite the export economy, a task made particularly urgent given the province’s heavy reliance on federal transfer payments, which account for 39 per cent of its budget. New Brunswick’s gross domestic product per capita lags behind the national average by approximately 78 per cent, according to a Parliamentary Budget Officer (PBO) report, suggesting that the province will likely continue to trail the rest of Canada for years to come. This situation necessitates proactive measures to bolster the export economy and generate sustainable economic growth.
Campbell stresses that the ability to compete globally is vital for New Brunswick’s economic future. He suggests that strategic investment in industries like aquaculture, energy, automation, and mining is crucial to shift the balance of trade. For example, 25 years ago, mining contributed six per cent to New Brunswick’s GDP; now it represents less than one-half of one percent. Despite the abundant resources – including manganese, tungsten, and copper reserves – the industry has dwindled significantly. To revitalize the economy, Campbell argues that the province must create an environment conducive to business investment. This includes competitive tax incentives and a streamlined process for employers to recruit skilled workers from outside the country. Provinces with a healthy trade surplus, such as Alberta, Saskatchewan, and Ontario, demonstrate that a robust export economy fuels economic growth and prosperity. Alberta, with a trade surplus exceeding $30 billion annually, has the highest GDP per capita in the country, illustrating the benefits of a diversified and competitive economy.
Incoming Premier Susan Holt, a former IT executive and CEO of both the Fredericton Chamber of Commerce and New Brunswick Business Council, possesses a strong understanding of the economy, according to David Campbell. Campbell, who worked with Holt and Liberal Premier Brian Gallant as an economic advisor, believes she has a profound understanding of the economy, possibly even greater than any incoming premier in recent history. Holt’s election platform focuses on investment in the energy, technology, agriculture, and manufacturing sectors, coupled with efforts to diversify international markets. However, Campbell cautions that the province’s challenges are deeply rooted in systemic issues that require more than just policy adjustments. The province faces an aging population and relatively low unemployment, leading to a situation where economic development has been overshadowed by concerns such as healthcare, housing, and affordability.
Despite the challenges, Holt’s background offers a promising foundation for economic revitalization. Campbell emphasizes that New Brunswick’s reliance on federal equalization payments – representing approximately 75 per cent of the province’s revenue – underscores the importance of a strong economy. If New Brunswick doesn’t actively work to grow its economy and reduce its reliance on these transfers, it risks perpetuating its current economic situation. He believes that Holt and the Liberals need to demonstrate a genuine commitment to economic development, not just to benefit New Brunswick, but also to maintain a fair contribution to the Canadian federation. Ultimately, Campbell believes that a concerted effort to boost the export economy is not merely a desirable goal, but a fundamental necessity for the province’s long-term prosperity and its place within the Canadian economy.
