The Sudbury Star is the City of Greater Sudbury’s daily newspaper.
The grey wintry skies mirror the global economic outlook for 2015-16, says one of Canada’s foremost economists. But the local economy should inch upwards over the next two years.
Derek Burleton, vice president and deputy chief economist for the TD Bank Group, spoke to Greater Sudbury’s business community on Thursday at a luncheon hosted by the Chamber of Commerce.
“I’m not expecting any major improvements in the year ahead,” Burleton said of the global economic outlook for 2015. Specifically, he pointed to Japan and the Eurozone, indicating the latter would have to make some “difficult decisions over the next year.”
There is good news for this city, however, as the price of nickel is expected to climb, but not as a result of increased demand.
“The big story here is that it’s a supply story; the export ban of ore in Indonesia will lead to a supply deficit in 2015. That’s what’s being priced into the market,” Burleton told the crowd assembled at Ristorante Verdicchio.
He projected nickel prices would near $15 per pound; however, a forecast published by TD in September put that projection at a more modest $10.44 per pound by 2016. Burleton noted he is “not as optimistic on copper; it’s pretty low and flat,” due to an excess of the mineral flooding the market.
Sudbury is “healing, but still carrying baggage” with a sunny outlook for the local job market. By 2016, unemployment is expected to hover at about 6.5%, while about 1,000 new jobs will be created. The housing market should remain balanced, but is expected to inch toward a buyer’s market, meaning more houses at lower prices.
The northern forestry industry also appears to be on the mend.
“It appears that its long slide has stabilized, but it’s early in the recovery phase, because U.S. home-building is in the early stages of its recovery,” Burleton said. “I think from a cyclical perspective, the sector appears to be positioned to benefit for two reasons — lower Canadian dollar and rising US demand.”
As for the Ring of Fire, Burleton was decidedly pessimistic, contending he does not believe the development of the project will go forward in the near future.
“There’s obviously huge potential there, but it’s the upfront costs to get it rolling, and that’s the issue at the moment. There’s infrastructure and there are a lot of players involved,” he told reporters. “The time may not be right for it. Governments are feeling pressure; they’ve got a lot of priorities.
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