Province of Manitoba Economic and Fiscal Update Manitoba Finance: October 2017 1
Manitoba s Economy One of ten Canadian provinces (fifth-largest in population) Centrally located in North America with a comprehensive transportation and communication network Total area 650,000 km 2 (about 24 times the area of Massachusetts) Population: 1.34 million, the fastest growing province in last three years Capital: Winnipeg, Pop. 828,000 Extensive natural resources (minerals, forests, fertile soil, freshwater lakes) Sound credit rating: Moody s: Aa2 (stable) and S&P: A+ (stable) 2
Broad and Balanced Industrial Base The Manitoba economy has a relatively well-balanced industrial base with a majority of medium-sized industries each contributing over 5% to total value-added output The range in contribution from the smallest to the largest industry is the narrowest among provinces: many similar sized sectors Manitoba is the most stable economy among provinces with steadiest growth in: Real GDP Employment Labour income International exports Manufacturing sales 3
Diversified Industries GDP By Industry Shares, 2016 Health and Social Services, 8.0% Public Administration, 7.7% Accommodation, Food, Arts and Entertainment and Other Services, 4.3% Education Services, 5.4% Professional and Scientific, 3.1% Agriculture, Forestry and Fishing, 3.7% Mining, Oil and Gas, 5.0% Utilities, 3.0% Construction, 8.4% Manufacturing, 9.8% Goods-Producing Information, Culture, Administration and Management of Companies, 5.0% Real Estate, 3.6% Wholesale, 5.8% Retail, 5.8% Commercial Services Non-Commercial Services Note: Excludes imputed rent Finance and Insurance, 5.9% Transportation, 6.4% Sources: Statistics Canada and Manitoba Finance 4
Manitoba s Broad Export Base Grains, Oilseeds and Livestock Aerospace Components and Service Transit and Inter-City Buses Processed Food Products Machinery and Equipment Mining and Oil Extraction Electricity (Mostly Hydro) Industrial Chemicals Pharmaceuticals 5
Lower U.S. Exposure Manitoba Exports, 2016 Japan 2.3% Canada Exports, 2016 Mexico 2.7% Japan 5.5% China 7.1% Other 16.7% United States 68.0% United Kingdom 3.5% China 4.3% Other 14.5% United States 75.4% Manitoba: 32% Non-U.S Exports Canada: 24.6% Non-U.S Exports Source: Statistics Canada 6
Manitoba U.S. Merchandise Trade Manitoba Exports and Imports From U.S. ($ Billions) Manitoba/U.S. Merchandise Trade Balance ($ Billions) 18.0 Imports From U.S. Growing Over Time 0.0 16.0-1.0 14.0 12.0 10.0 U.S. Exports U.S. Imports 15.3 9.2-2.0-3.0-4.0 8.0-5.0 6.0-6.0 4.0-7.0-6.1 2.0-8.0 0.0 1997 2000 2003 2006 2009 2012 2015-9.0 1997 2000 2003 2006 2009 2012 2015 Source: Statistics Canada 7
Growing Population - Sound Household Finances Annual Population Growth, 2000 2017 (Per Cent) Household Debt Per Capita, 2017 Year-To-Date (In Dollars) 2.0 1.8 1.6 Fastest Population Growth Among Provinces Over The Past Three Years 60,000 50,000 Lowest Household Debt per Capita Among Provinces 1.4 1.2 1.0 50-Year Historical Average 0.6% 40,000 30,000 0.8 0.6 20,000 0.4 0.2 10,000 0.0 2000 2004 2008 2012 2016 - MB QC PE NB SK NS NF CAN AB ON BC Sources: Statistics Canada and Bank of Canada 8
Strengthening Labour Market Unemployment Rate, 2017 Year-To-Date (Per Cent) Manitoba Employment, Q1 2016 to Q3 2017 (Quarterly Average In Thousand of Workers) 16.0 14.0 Consistently Among the Lowest Unemployment Rates and Among the Highest Labour Force Participation Rates in Canada 14.6 650 645 Job Creation Improves in 2017 12.0 10.0 8.0 6.0 5.3 5.4 6.2 6.2 6.3 6.5 8.1 8.2 8.3 9.9 640 635 630 4.0 625 2.0 0.0 BC MB QC ON SK CAN AB NB NS PE NL 620 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Source: Statistics Canada 9
Economic Growth Rate Real GDP Growth, 2012 2018F (Per Cent) 3.5 3.0 2.5 2.0 1.5 1.7 2.7 2.5 Economic Growth Expected to Moderate In the Near-Term 2.8 2.6 1.3 Canada Manitoba 1.8 1.5 1.9 3.0 2.3 Forecast 2.1 1.8 1.0 0.9 0.5 0.0 2012 2013 2014 2015 2016 2017F 2018F Sources: Statistics Canada, Manitoba Bureau of Statistics and Manitoba Finance Survey of Economic Forecasts 10
Economic Outlook, 2017f-2018f Manitoba Finance Survey of Economic Forecasts (As at October 2017) 2017f 2018f Manitoba Canada Manitoba Canada Percent Growth Unless Noted Real GDP 2.3 3.0 1.8 2.1 Nominal GDP 4.6 5.4 3.7 4.0 Employment 1.5 1.6 0.8 1.1 Unemployment Rate (%) 5.4 6.5 5.4 6.2 Consumer Prices 1.6 1.7 2.0 1.8 f Forecast based on Manitoba Finance Survey of Economic Forecasts Source: Manitoba Finance Survey of Economic Forecasts 11
Restoring Fiscal Discipline Budget 2017: Responsible Recovery Restoring credit ratings, meeting budget targets, stabilizing net debt to GDP and sustainable investment in strategic infrastructure Foundation for Strong Fiscal Fundamentals Fiscal Performance Review of core government departments Review of all tax credits New legislation: The Fiscal Responsibility and Taxpayer Protection Act The Public Service Sustainability Act The Health Sector Bargaining Unit Review Act The Red Tape Reduction and Government Efficiency Act 12
Responsible Recovery 200 0 Annual Surplus (Deficit) 2009-10 to 2019-2020p (Millions of Dollars) -200 (185) (181) -400-600 (560) (522) (430) (549) -800-1,000-1,200 (1,001) (839) (764)a (698) (840) (911)b New Administration a actual, b budget and p projection Source: Manitoba Finance 13
Comparable Among Peers Net Debt to GDP Ratio, 2017-2018B (Per Cent) Interest on Debt to Revenue, 2017-2018B (Cent/Revenue) 60.0 Average Among Provincial Peers 16.0 Below Average Among Provincial Peers 50.0 14.0 12.0 40.0 10.0 30.0 8.0 20.0 6.0 4.0 10.0 2.0 0.0 AB SK BC PE CAN MB NS ON NB QC NL 0.0 AB SK BC MB PE NS NB CAN ON QC NL Source: Manitoba Finance 14
Budget 2017 Sinking Funds and Other Earnings 1.5% Revenues Federal Transfers 25.8% Income Taxes 26.0% Community, Economic and Resource Development 9.0% Justice and Other 7.6% Families 12.6% Expenses Debt Servicing 5.8% Health 39.2% Fees and Other Revenue Net Income of 14.3% Government Business Enterprise 4.4% All Other Taxes 28.0% Education 25.8% Source: Manitoba Finance 15
Manitoba Quebec British Columbia Saskatchewan Texas Wyoming Kentucky North Dakota South Dakota Minnesota Wisconsin Ontario California North America s Clean Energy Leader 97.5% of electricity generation is hydro, 2.3% is wind and 0.2% is thermal. 20 Retail Price of Electricity (Cents/kWh $C) 18 16 Roughly 1/4 of the electricity generated is exported outside of Manitoba (U.S., Canada). 14 12 10 8 Manitoba Hydro s current generation capacity is 5,680 MW, with an additional 4,400 6 4 MW more of potential 2 generation identified. 0 Source: Manitoba Hydro, 2016/2017 Annual Report 16
Manitoba Hydro Capital Initiatives Manitoba Hydro is currently investing in both a major generation project and transmission project. Keeyask Hydro Generating Station Project Design Capacity: 695 MW Anticipated Completion: 2021/22 Anticipated Cost: $8.7B Bipole III Transmission Line Project Design Capacity: 1,364 km Anticipated Completion: 2018/19 Anticipated Cost: $5.0B Source: Manitoba Hydro 17
Manitoba Credit Ratings Profile Manitoba s credit rating remains strong given elevated global economic uncertainty. Manitoba s credit rating is generally the highest among non-resource rich provincial economies. Moody s Credit Ratings S&P Credit Ratings BC Aaa BC AAA SK Aaa SK AA AB Aa1 QC AA - MB Aa2 NS A + QC Aa2 MB A + ON Aa2 AB A + NS Aa2 ON A + NB Aa2 NB A + PE Aa2 PE A NL Aa3 NL A Sources: Moody s Investor Services and Standard and Poor s Rating Services 18
Borrowing Requirements C$6.7 billion Refunding Maturing Debt $2.1 billion New Cash Requirements $4.6 billion $468M Other Crowns & Org. $779M General Programs $418M Capital Investments $2,967M Manitoba Hydro Budget 2017 was tabled on April 11, 2017. Expected borrowing requirements for fiscal year 2017/18 are C$6.7 billion. Planned funding through both domestic and international capital markets. To date, we have funded $4.9 billion, 72% of our needs for fiscal 2017/2018. Source: Manitoba Finance 19
Borrowing Program (C$ Billion) 8.0 Future Expectations International Domestic 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018b b budget Source: Manitoba Finance 20
Funding Sources (Apr 1, 2012 Oct 20, 2017) AUD MTN 4% U.S. Global 21% CAD Public Debentures 46% FRN 7% EMTN 10% MTN 11% Savings Bonds 1% (discontinued in 2016) GBP, JPY, HKD & EURO Source: Manitoba Finance 21
Debt Maturity Profile (C$ Billion) 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Manitoba conducts prudent debt management practices and has achieved a stable level of debt maturity profile over the intermediate term. 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033-2037 2038-2042 2043-2064 As of October 20, 2017. Excludes short-term debt and other liabilities, and the incremental impact of future financing. Net of sinking fund maturities. 22
Debt Portfolio Fixed/Floating Ratio March 31, 2016 March 31, 2017 Floating 8% Floating 10% Fixed 92% Fixed 90% f forecast. All figures for Core Government debt Source: Manitoba Finance 23
Thank you! Regularly updated Economic and Financial Reports are available on the internet at: www.gov.mb.ca/finance 24