The NWT experienced the most drastic decline in gross domestic product (GDP) of any jurisdiction in Canada in 2020 after the World Health Organization declared COVID-19 a pandemic on March 11.

Pandemic disruptions caused a downward trend for all Canadian provinces and in the NWT that amounted to the most severe economic contraction in 40 years, according to a report on GDP released May 3 by Statistics Canada.

READ HERE: Gross domestic product by industry: Provinces and territories, 2020

GDP fell 10.4 per cent in the NWT in 2020, with oil and gas extraction and mining accounting for the steepest declines.

“Conventional oil and gas extraction fell 30.7 per cent, the result of a fire at the Norman Wells site,” said the report, referring to a July 31 fire at the Imperial Oil plant outside the town.

Diamond mining contracted 30.3 per cent, largely due to the Ekati mine’s suspension of production.

The mine halted operations in March amid the spread of COVID-19. It began bringing workers back in December, in anticipation of a restart of operations. In February 2021, the mine was sold to Arctic Canadian Diamond Company.

Other declines included wholesale trade, which dropped by 36.6 per cent; goods-producing industries decreased 15.6 per cent; services-producing industries fell by 8.3 per cent; and utilities output contracted by 9.3 per cent.

Although engineering construction rose by 60.9 per cent and residential building construction by 11.3 per cent, non-residential building construction fell 22.7 per cent, following its 53.3 per cent decline in 2019, after several public sector buildings were completed in the recent years.

Renée Comeau, executive director of the NWT Chamber of Commerce, said that in addition to the impact of the Ekati shutdown, “there was not nearly all the major construction projects that there normally are, thus the downgrade in activity in manufacturing.”

The tourism sector also experienced huge declines in activity. By the end of March 2020, 92 per cent of tourism businesses in the NWT reported “significant negative impacts” from the pandemic, according to the Tourism 2025 report.

READ HERE: Tourism 2025

In the summer of 2020, some operators lost more than 85 per cent of their client base and some lodges, such as Blachford Lake and Peterson’s Point saw declines of at least 75 per cent.

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But retail trade and finance and insurance saw increases of 4.4 per cent and 4.1 per cent, respectively.

Yukon, Nunavut fared better

Amid the declines of the NWT’s economy, its territorial neighbours were the only jurisdictions where GDP grew in 2020.

In Yukon, GDP increased 1.1 per cent in 2020 and in Nunavut it grew by 3.5 per cent, mostly due to mining production in gold and iron.

“Mining is the key influencer of GDP in all three territories, which is a function of it being an economic advantage over the usual drivers in the south, (for example) farming, fishing, manufacturing, etc,” said Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines.

Hoefer noted that mineral development in the NWT is also lagging because of decreases in exploration investment.

A March 16 report from the Chamber on projected spending intentions found that the NWT had the lowest dollar increase in exploration investment among the territories in 2021 compared to 2020, rising to $47.7 million in 2021 from $35.4 million in 2020.

READ REPORT HERE: NWT and Nunavut exploration expenditures remain weak

In Nunavut, projected spending intentions rose to $85.4 million in 2021 from $71 million in 2020. In Yukon, there was a rise to $98.5 million in 2021 from $71 million in 2020.

For Canada as a whole, exploration investment was projected to increase to $2.8 billion in 2021 from just over $2 billion in 2020.

An earlier Chamber report from November of last year found 2020 had the lowest level of exploration expenditures in the NWT since 2009, when they came to $44 million. Expenditures peaked at $194 million in 2007.

RELATED COVERAGE: Investment in mineral exploration in territories largely declining

“This tells us that the NWT continues to struggle with attracting investment due to internal problems, which must be addressed if we are to ‘Emerge Strongly’ from COVID-19 and rebuild a more self-reliant economy,” Hoefer said.

GDP statistics forecast in 2020

A Conference Board of Canada report published in June 2020 forecast that the NWT would fare the worst of the three territories.

RELATED REPORT: NWT to fare the worst among the three territories’ economies in 2020-2021

It attributed that weak projected performance to the Ekati suspension and declines in tourism and food services.

A more recent report from the Conference Board, released in December 2020 forecast that the NWT would have the weakest economic output of the territories in 2021 as well.

RELATED COVERAGE: NWT economy has weakest outlook of territories into 2021

Blair McBride

Blair McBride covers the Legislative Assembly, business and education. Before coming to Yellowknife he worked as a journalist in British Columbia, Thailand and Ontario. He studied journalism at Western...

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