Summary and Highlights of the Québec mining industry in 2001
Although most analysts had predicted a slowdown
in the world economy in 2001, the slump was worse than expected.
The drop in economic activity began in the United Sates and spread
to almost all areas of the world. Signs of the slowdown were already
perceptible before the September 11 terrorist attacks and grew stronger
after the attacks, meaning that, in most parts of the world, the
downward adjustments to the 2001 growth forecasts were greater than
would otherwise have been expected. This was the first time in twenty
years that all OECD countries had experienced such a synchronized
economic slowdown. The world economy is estimated to have grown
by 2.4% in 2001.
The decline in the US economy, which began in the
third quarter of 2000, was even more marked in 2001. Industrial
production continued to drop, as did business investments and exports.
The US economy was particularly affected by a decreased demand for
goods in the information and communications technology sector. The
events of September 11 rattled the confidence of economic agents,
especially consumers whose spending was at the time the main driving
force behind the US economy. The United States, after its longest-ever
expansion cycle, saw its real GDP shrink by 1.3% in the third quarter,
and on November 26, the National Bureau of Economic Research
(NBER) announced that the country was officially in recession. For 2001
as a whole, the growth in real GDP is estimated at 1.1%.
In the euro zone, growth had already begun to falter
in late 2000, and was hit harder than expected. Domestic demand
dropped, especially in terms of investment, and the flow of exports
slowed. The growth in real GDP during the second and third quarters
was only just above zero, and the terrorist attacks led to a further
decline in the economic situation of the euro zone, although it
should be able to avoid a recession.
Japan moved into recession for the third time in
the last ten years. In fact, the Japanese economy is stalled since
mid-2000, owing to the collapse of the information and communications
technology sector and the drop in outside demand. Japan is also
facing major structural problems, including an extremely high public
debt and a banking sector that has to deal with a large number of
Economic activity in Canada went into decline in
the fourth quarter of 2000, and the growth of the Canadian economy
was strongly compromised by a drop in exports, especially to the
United States. Household spending remained relatively high, while
business investment, in particular in machinery and equipment, plummeted.
After a reduction in the GDP in the third quarter, partly attributable
to the terrorist attacks, Canada was considered by most analysts
to have slipped into recession. For the year as a whole, Canada's
real GDP probably grew by 1.3%. Clearly, Québec was also
affected by the difficulties experienced by its two major trading
partners, the United States and Canada. The Québec economy,
hit hard by a drop in exports to the United States, especially in
the field of information and communications technologies, was almost
in recession in the first quarter, and the growth in Québec's
GDP for 2001 was probably around 1.1%.
This major slowdown in the world economy obviously
reduced demand for most minerals, leading to larger inventories
and a drop in prices, which had already begun to move downwards
in the last months of 2000. This was particularly true in the case
of base metals, which recorded average prices in December 2001
that were 20% below the comparable prices at the end of the previous
year. Gold prices ran counter to this trend, because of the September 11
events but still, they only rosed slightly
Outlook for 2002
The recovery of the world economy will depend largely
on the economic performance of the United States. According to most
forecasts, the recession in the United States will be short-lived.
The easing of monetary policy in 2001, along with the implementation
of important tax and spending measures in the federal budget, should
result in a gradual recovery of the US economy during the first
quarter of 2002 and a return to growth in the second half of the
year provided, of course, that the geopolitical context and confidence
levels do not worsen. Growth in world GDP is expected to average
An easing of monetary policy and a strong recovery
in the United States would allow the economy of the euro zone to
gather speed by the end of 2002. In Japan, not only will the recession
continue into the first two quarters, but no recovery is expected
before the end of the year, and then only if the situation improves
in the United States and the structural problems of the Japanese
economy are resolved. The economy in Canada and Québec will
obviously benefit from the expected recovery in the United States,
and also from various internal factors, such as the set of macro-economic
instruments brought into play by both the federal and provincial
governments. The two economies should therefore return progressively
to a growth situation during the first half of the year.
In 2002, the demand for mineral products will increase
as the world economy recovers. Prices for base metals should begin
to turn around, especially during the third and fourth quarters.
However, the pace and strength of the recovery will also depend
greatly on the ability to match production to demand.