The Yukon and Nunavut were the only jurisdictions across Canada where real gross domestic product (GDP) rose in 2020, but the Northwest Territories economy didn’t fare as well during the first year of the pandemic.
According to a new report from Statistics Canada, economic output in the NWT fell by 10 percent in 2020 – the largest drop across Canada – due to lower mining and oil and gas extraction. Meanwhile, the other territories experienced sharp increases in mining activity.
Real GDP reflects the value of all goods and services produced by an economy, adjusted for inflation.
Even before the pandemic the NWT’s economy was in decline, due in part to ageing diamond mines and a lack of economic diversification. In 2019, the territory’s real GDP dropped by 8.1 percent – the largest decline in the NWT’s GDP since 2011 – largely the result of declines in mining and engineering construction.
Among the provinces, Alberta’s economy has been the hardest hit by the pandemic due to the impact of Covid-19 on oil prices. Real GDP in the province fell by 8.2 percent in 2020.
Employment across the North has weathered the storm of Covid-19 shutdowns better than elsewhere in Canada. As of May 2021, employment in the NWT was above pre-Covid-19 levels. Employment in the Yukon has remained relatively stable, and employment in Nunavut has shown signs of recovery.
While NWT’s finance minister reported in October 2020 that the territory had lost approximately 4,000 jobs, figures from the territorial government suggested employment was back to pre-pandemic levels by January 2021.
Some businesses have shuttered across the territory during the pandemic. The number of active businesses operating in the NWT dropped by 1.3 percent between February 2020 and February 2021 compared to a decline of two percent nationally. In the Yukon, the number of active businesses increased by one percent during the same period, and Nunavut saw a rise of 0.6 percent.
Earlier this month, the NWT premier released the territory’s long-awaited social and economic recovery plan. It lists actions the territorial government has taken to date in response to Covid-19 and sets a number of recovery goals, but is light on details about how those will be achieved and contains no financial commitments.
In contrast to the report from Statistics Canada, the territory reported that between 2019 and 2020 real GDP shrank by just 6.6 percent. It reported that diamond production dropped 15.2 percent, resident employment declined 3.9 percent, and the employment rate fell to the lowest rate on record.