Briefing Note: Saskatchewan

Before the COVID-19 pandemic, Saskatchewan was projected to see a rare year of economic growth.

“Our economy was sluggish heading into the crisis, but it was showing signs of shaking off some rust. Capital investment projections for 2020 were forecasting an increase for only the second time in the last six years, 0.4%,” says Derek Lothian, the CEO of the Insurance Brokers Association of Saskatchewan.

Then COVID-19 hit. “In March, our unemployment rate hit 7.3%— the highest mark since March 1996,” said Lothian. That’s 2.3 percentage points higher than March last year. In addition, 26% of small businesses reported at the start of April that they did not have sufficient cash flow to cover their monthly expenses. “It’s not a good situation to be in for a lot of people.”

The unemployment outlook is bleak because Saskatchewan only has three ways to generate wealth: Natural resource extraction, manufacturing, and agriculture. “You don’t have to look too far in the market to see what oil has done — it dipped into the single digits in [March],” Lothian said. “And there’s definitely not capital in the market to be doing exploratory drilling.” Mines are shutting down and manufacturing isn’t happening, Lothian observed. “The one saving grace Saskatchewan has going for it is agriculture. We’re approaching the centre of farming season, which has a major bearing on the health of our economy. Most of those operations should be able to move forward somewhat unimpeded.”

Lothian believes Saskatchewan brokers won’t feel the full brunt of COVID-19-related policy cancellations or reductions for several months, “we’ve already heard anecdotally from some brokers that their premium volumes were starting to soften. Brokers are, if anything, very good bellwethers of the economy.”