Which contributed to the increase in GDP
Much of the province's increase in real gross domestic product (GDP) was due to last year's record harvest of 38.4 million tonnes of grains and oilseeds. "Businesses accumulated $3.2 billion, mainly in farm inventories, which contributed to the increase in GDP,' Statistics Canada said.
The province also posted an 8.6 per cent increase in household disposable income - the largest among the provinces - thanks largely to a 50 per cent increase in "gross mixed farming income," the federal agency said.
But Doug Elliott, publisher of Sask Trends Monitor, said the province's five per cent increase in real GDP in 2013 is less impressive than it appears. For example, last year's bumper crop contributed to the record western Canadian harvest, which led to the grain transportation backlog that resulted in millions of tonnes of crops being stored in grain bins or in farmers' fields, rather than shipped to export markets.
"So you have this record crop, that means you've produced more, therefore GDP went up," Elliott said. "What happens (in 2014) when the grain gets moved out and we have lower production, the GDP will decline to correct for this." One bank is forecasting one per cent real GDP growth in 2014.
While household and farm income increased significantly in 2013, Elliott said that simply reflects the way economists account for large increases in inventory. "GDP measures (economic output) on an accrual basis, meaning the value of that crop in the bin gets counted in 2013. So that's why we had this huge increase in income.' He noted that household spending increased by 3.5 per cent in 2013, lower than last year, and that private sector investment (as measured by business gross fixed capital formation) actually declined by 2.1 per cent last year. Exports were up only 1.4 per cent, suggesting much of that bumper crop didn't get shipped to market in 2013, he added.