2023-24 Operating Context
The three territories account for over 39% of Canada's landmass and in 2022, Statistics Canada's population estimates noted that the territories are home to approximately 130,000 people, half of whom are Indigenous. The territorial Indigenous governance landscape is composed of settled land claims, self-governing Indigenous organizations and some unsettled land claims.
Economic development and growth throughout the territories is challenging due to a sparse and widely distributed population, a significant infrastructure deficit, high energy costs, difficulty accessing capital, fluctuations within the natural resource extraction sector due to cyclical commodity pricing, and a shortage of skilled labour. These challenges inform CanNor's activities and operations, and impact how it delivers on its mandate.
The territories' natural resources will continue to be a strong foundation for economic growth and sustainability. According to the Conference Board of Canada's latest Territorial Outlook, although economies may slow in the near-term, the territories remain poised for long-term growth. In Nunavut, the Gross Domestic Product (GDP) is forecasted to increase 7.4% in 2023, and 12.3% in 2024. In the Northwest Territories, GDP is expected to decrease .4% in 2023, and increase .9% in 2024. In the Yukon, GDP is forecasted to increase 4.4% in 2023 and 6.4% in 2024. To complement expected growth of resource development in the medium- and long-term, sustainable territorial economies will continue to require a focus on investments that contribute to economic diversification and innovation.
Canada's territories have a significant infrastructure deficit that makes it difficult to get goods to market and increases costs of doing business. A lack of affordable and reliable connectivity when compared to southern Canada challenges Northerners' access to the knowledge economy as well as businesses' ability to attract and retain skilled labour. With nearly 70% of northern communities relying on aging diesel generators for power, the high price of energy drives up the cost of doing business in the North, also impeding economic development efforts.
Climate change is bringing both challenges and opportunities to the northern economy. Warming temperatures have led to permafrost degradation resulting in the deterioration of some infrastructure and has shortened the operating season and load capacity of winter roads, creating associated challenges to businesses and communities. However, melting ice conditions in the high Arctic also provides an opportunity for increased international shipping and tourism.
In response to these challenges and opportunities, CanNor works closely with government departments to implement national activities, such as targeted support for clean technology activities, the implementation of the Arctic and Northern Policy Framework (ANPF), and the Pan-Territorial Growth Strategy. This continued collaboration will support the Agency's efforts as it advances plans and priorities in support of northern economic development.