In 1999 and 2000 economic commentators took up the
term the "Goldilocks economy" to describe the world economic
situation – everything that theory says should be in place
for sustained growth is in place, and it is “just right”.
The combination of freer trade and investment flows, the virtual
elimination of dangerous tensions between the worlds largest military
powers and rapidly improving technology set the stage for stable
monetary conditions, low interest rates and growth without inflation.
This is not to say that things are perfect or that there are not
pockets of distress. However, in terms of the world picture the
economic fundamentals were in an unprecedented state of well being.
Real growth in Canada averaged 3.9% per year from October 1996
to September 2000. The economy began to slow in mid 2001 and the
economy grew by only 0.8% for the period October 2000 to September
2001. The final quarter saw the economy contract marginally but
it followed this with more growth in the first quarter of 2002.
The United States showed a similar but slightly more vigorous pattern
of growth at 4.2% per year from October 1996 to September 2000,
however its growth slipped to 0.6% for the period October 2000 to
September 2001. Its economy contracted in the fourth quarter of
2002 and expanded in the first quarter of 2002.
But for its timing, a slowdown was expected. Economic growth has
never been a nice steady climb, but the slowdown was different.
Over-investment, not subsidized consumer demand or demand driven
inflation, spawned the reduction in growth rates in the last half
of 2001. The economy would have to pause while it earned a return
on its heavy, and maybe too large, investments in new technology
and machinery and equipment.
Beyond its more fundamental effects on people’s sense of
safety and well being, September 11, 2001 also hastened and possibly
deepened the economic slowdown that was already underway. Notwithstanding,
the 2001-2002 recession is likely to be among the least recessive
on record. Canada finished 2001 with a 2.7% real growth in GDP and
the United States had a 1.6% increase in real GDP.
As of mid-May 2002, the consensus among forecasters is that Canada’s
economy will have grown about 2.7% during 2002 and could post a
gain of about 3.5% in 2003. The US is expected to show a 2002 growth
rate of about 2.8%, strengthening to 3.5% in 2003. A Nova Scotia
Department of Finance survey of economic fore-casters is a bit more
bullish for the medium term. It projects an economic growth rate
of 3.5% in Nova Scotia and a 4.0% growth rate for Canada in 2003.
This would mark a return to the growth rates seen during the period
from 1996 - 2000.What is most important in this observation is that
in 2001, and into the short term at least the Canadian economy is
expected to outperform the United States. This situation has not
occurred at anytime during the period October 1996 to September
One of the most immediate issues in the re-use plan for the SYSCO
property is the extent to which it could be re-used for industrial
land uses. The site has the majority of the infrastructure needed
by most manufacturing companies. Working against the manufacturing
re-use strategy is the fact that manufacturing as a percentage of
the Canadian, U.S. and most developed economies is declining. However,
the relative decline is not indicative of an absolute decline. For
example, industrial production grew 4.1% per year (versus 3.9% for
the total economy) in Canada from October 1996 to October 2000.
During the same period in the U.S., it grew at an average rate of
3.9% (versus 4.2% for the total economy).
Production growth weakened well before September 11, 2001. It
shrank by 3.6% in Canada between August 2000 and July 2001, and
by 4.8% in the U.S. As is normal in slow or recessive economic times
industrial production weakens as inventories are drawn down . Industrial
output is now (May 2002) recovering. However, industrial production
declined less in Canada than the United States and is recovering
more quickly. These figures suggest that the goods producing sector
of the Canadian economy appears able to outpace its U.S. counterpart
and even the other sectors of the Canadian economy.
Taken together these findings suggest that manufacturing in Canada,
and in North America, is not in decline but rather is changing its
shape. The most striking example is the closure of large steel producers
in North America and loss of hundreds of thousands of jobs. The
manufacturing sector more than replaced the lost production and
jobs with the opening of "mini-mills", higher technology
steel producing plants and higher value added manufacturing facilities
for car parts, computers, CD discs, etc.
The fact that Canada’s goods producing sector can out-perform
its U.S. counterpart is also consistent with the evidence. The historical
trend of multi-nationals to conduct research and product development
in what they consider their home countries continues. Manufacturing
is then dispersed to other countries to take advantage of lower
wage costs, available infrastructure, reduced transportation costs
to market, etc. Manufacturing in Canada, and the CBRM, is in a position
to take advantage of these global factors, and the additional advantage
of the North American Free Trade Agreement (NAFTA).