Telecom carriers contribute to expansion of Canadian economy, TD bank finds

Telecom and other parts of the "new economy" are improving Canada’s economic performance, a new study reports. The Toronto Dominion Bank’s Quarterly Industrial and Provincial Forecast predicts GDP growth in each province and in many of these regions, the expansion is driven by the new economy. The bank defines new economy as goods and services industries in telecommunications, fibre optics, and computers and software. Although such firms only represent seven per cent of the national GDP "these industries have accounted for nearly one-quarter of economic growth, on average, in the provincial economies since 1997," the report states. Telecom is by far the leader in this growth. In 1998, the percentage change in real GDP was 3.1 per cent in total. Communications industries saw an increase of 8.3 per cent, second only to the 8.5 per cent in business services. The 13.7 per cent registered for telecom exceeded all other sectors in 1999, when the total rate was 4.3 per cent. Looking ahead, the TD bank expects communications to jump 11.8 per cent this year, trailing the 13.6 per cent for mining and drilling (except for petroleum and natural gas). Communications takes the top spot in 2001 and 2002, with increases of 8.8 per cent and 7 per cent respectively. A study of the service industries of the new economy places telecommunications carriers in the same sector as cable TV, computer and related services, and computer software. The telecom section, worth $19 billion last year, had a compound annual growth rate of 11.2 per cent in 1997-99 and a projected increase of 9.6 per cent from 2000 to 2002. The sector’s two per cent share of total GDP in 1996 is expected to grow to three per cent by 2002. "We have defined the ‘new economy’ industries to include only the suppliers—rather than the end-users—of these technologies, since these are the industries that benefit most directly from the structural revolution underway," the authors write.The forecast makes specific reference to telecommunications and/or high technology industries in the provinces. Of the west coast, it says, "By next year, the major urban centres will likely lead in terms of job growth, helped by ongoing strength in British Columbia’s high-technology sector—most notably, the telecommunications, biotechnology and Internet-related services industries." Calgary leads way The new economy is also a factor in neighbouring Alberta, the study says. "Calgary is leading the way, as its booming telecommunications, electrical and electronic products, and business services industries fuel sizzling employment growth of over four per cent for the sixth year in a row in 2000—the strongest showing among Canada’s major urban markets." The majority of jobs being created in Ontario are in the urban areas, the linchpin of the new economy. "These cities are expected to continue to account for a disproportionate share of job creation over the next few years," the bank predicts. "In particular, the Ottawa area is likely to remain a job machine over the forecast period, as it benefits from continued rapid expansion in the telecommunications equipment and fibre-optics industry." Quebec is expected to see growth of just under four per cent for the second year in a row. This is the province’s best performance since 1987-88. The 1999 figures reflected development in most sectors. "This year’s expansion has been more narrowly concentrated in the province’s vibrant new economy industries and in its manufacturing sector," the TD bank finds. Also hovering around a four per cent increase is New Brunswick, with much of the activity taking place in Saint John. "The city’s prosperity has been driven in part by an expanding information-technology sector, including a booming communications industry," the report states. The study does warn, however, that growth in employment will remain lacklustre in 2001 and 2002.

Telecom carriers contribute to expansion of Canadian economy, TD bank finds

News | October 23, 2000

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