Provincial Outlook to 2041

What’s in store for the provinces in the next 20 years?

Updated: October 13, 2021

The provinces’ long-term economic outlooks depend a great deal on demographics—and international migration. Natural resources will still be important, but a transition away from hydrocarbons will call on industrial investment to step up in transforming the economy. Aging populations will challenge provincial public finances in two major ways: Greater healthcare expenditures and shrinking employment-driven tax revenues.

All provinces will see lower annual GDP growth in the next two decades relative to historical norms. Alberta, Ontario, and Prince Edward Island will see the strongest output gains. Growth in the other Atlantic provinces will be slowest and, in Newfoundland and Labrador, will become negative near the end of the forecast horizon.

Demographics
Labour markets and potential output
Demographics Rule the Day
Two Conflicting Trends Affecting Potential Output
Investment
Housing
Consumption
Government
Trade
Industry

Key findings

Population aging is bad news for the Ontario government, which was running huge deficits and a massive debt even before the pandemic. Both exploded during COVID-19 and will linger well into the long term.

Demographics are an essential component in shaping the long-term economic prospects of a province. It is here that Prince Edward Island has a distinct advantage over its Atlantic neighbours, as the province is a top destination for international immigrants.

Saskatchewan’s high fertility rate and comparatively young population is good news for the province. It implies that labour force participation will remain in good shape over the long term—something we can’t say for most other regions.

Alberta will record the strongest real GDP growth in Canada over the near term, partly because its economy was due for a stronger bounce-back following the steep decline in real GDP during the pandemic.