Yellowknife (July 02/01) - Government aid will be crucial to Nunavut for some time, according to the territory's first economic study.

It calculates that Nunavut residents spend $285 million more than the $682 million worth of goods and services produced there.

The resulting trade deficit is manageable as long as government spending remains strong, the study says.

But a population explosion combined with an eventual levelling off of federal spending means "per capita growth of the economy will decline."

Government spending makes up 55 per cent of Nunavut's economy, compared to 22 per cent nationally.

Carried out by the Conference Board of Canada, the study contains a forecast that looks ahead 20 years. Over that period an average 2.42 per cent growth rate is predicted, but most of that will involve spending of taxpayer dollars over the next decade.

The federal and territorial governments, and Nunavut Tunngavik, paid the Conference Board of Canada $80,000 for a baseline study, or a starting point, so the region's economic progress will be easier to measure.

It places importance on rapidly-shaping demographic trends, like growth from the current 27,000 residents to 43,000 by 2020. That's triple the national population growth average.

Already thee is a "serious problem" with shortages of everything from housing and waste management systems to child care and affordable transportation.

Over half of residents lack high school diplomas and 60 per cent of residents are under 25.

Inuit people, comprising 85 per cent of the territory's population, have a 48.1 percent unemployment rate for youths not in school between 15 and 24 years of age.

"Clearly, Nunavut youth need jobs, and to get them they need to have an education," the study says.

Conference Board of Canada economist Luc Bussiere said making the report was "challenging" because lack of data made it hard to measure the chunk of Nunavut's economy based on hunting and other traditional ways. It came up with the figures $40 to $60 million, including $30 million as the value of food that is left out of the loop of the modern economy, in which all goods and work have a dollar value.

Nunavut's Sustainable Development Minister Olayuk Akesuk said "the report gives us some insight towards merging our traditional, land-based economic activity with a wage-based economy."

The report suggests that involving youths in the traditional economy can give them confidence that can be used "for future economic activities."

Nunavut Tunngavik president Paul Quassa told a news conference, "We should take a positive view of Nunavut's economic future but it depends on our ability to develop our natural resources and human capacity."