In these challenging times the focus rightly remains on healthcare and the overall impact of the pandemic on virtually all areas of life. However, not to be lost in those concerns is the current state of the provincial finances and economy as that also has a significant impact on the well being of Manitobans both short and long-term. The future health of all of the social services that we rely upon is dependent upon a strong economic system to help finance needed supports.
In December, the province released an update on the financial state of Manitoba. Without doubt, the pandemic has had a dramatic impact on everything and that includes our finances. But within the report there was also good news and much to be optimistic about in terms of economic recovery for the province.
While the mid year report still projected a significant deficit for this fiscal year of $1.1 billion, that is almost half a billion dollars less than what was originally forecast. The improved projection is based on significantly higher retail activity than originally forecast, a sign that economic recovery continues. This has also resulted in Manitoba’s net debt to gross domestic product (GDP) decreasing by more than 3.5 percent as the projected deficit decreased and the economic growth projections increased.
On the employment front, Manitoba continues to be a leader in the country with unemployment being the second lowest in all of Canada at 5.1 percent. Many employers are struggling to find employees. At its worst during the pandemic, Manitoba had lost 90,000 jobs (in April of 2020). As of November 2021, the province had regained 86,100 net jobs.
While job and retail recovery are positive, along with a lower than expected deficit, there remains significant economic challenges ahead for Manitoba. The current size of the deficit, while much lower than projected, is still very high compared to historical Manitoba norms. This is in large part because of the needed healthcare spending and economic support programs that have been invested in during the pandemic. As well, Manitoba Hydro is forecasting a $191 million loss largely as a result of the lack of moisture Manitoba has experienced over the past several years. Added to this are national pressures which are impacting Manitoba including inflation, which is at rates higher in Canada than it has been for years. So, while the mid year report certainly had some positive financial news within it, there are still many pressures on the province’s finances.
Manitoba continues to be focused on moving through the pandemic and providing the supports that are needed to Manitobans. At the same time, we are looking forward towards continued economic recovery knowing that the long-term success of Manitoba depends upon a strong economy.