Canada’s Real GDP Forecast To Grow 6.1% In 2021

Ottawa, June 7, 2021 – The Conference Board of Canada forecasts that real GDP will expand by 6.1 per cent in 2021, followed by a gain of 3.5 per cent in 2022, as Covid-19 vaccinations enable the economy to fully reopen.

Every province in Canada is expected to record a solid economic recovery this year, as the return of restrictions on activities in the early spring combined with rapid gains in vaccinations reduced the number of COVID-19 cases. This will pave the way for a healthy economic recovery in the second half of 2021 and into 2022.

“Strong activity in the resource sector, manufacturing, and construction has allowed for an upward revision to our growth forecast for 2021 from what we released in our spring Canadian outlook,” says Pedro Antunes, Chief Economist at The Conference Board of Canada. “The vaccine rollout, which got off to a sluggish start, has ramped up and most Canadians should be fully vaccinated sometime this fall. This will lead to a reopening of the economy.”

Among Canada’s provinces, The Conference Board of Canada forecasts the following:

Prince Edward Island: Restrictions on travel into P.E.I. have helped keep case counts exceedingly low in the province, with no deaths and only a couple of hospitalizations. As more people are vaccinated and public health measures relaxed, P.E.I. will be well-positioned to recover more quickly than provinces with higher case counts. The province’s real GDP is expected to rebound by 5.7 per cent in 2021 and 3.4 per cent in 2022.

Newfoundland and Labrador: The fiscal situation remains dire in Newfoundland and Labrador as the pandemic and ensuing spending by the provincial government to support the economy aggravated a situation that was bleak before the pandemic arrived. Higher oil prices will provide some relief for the province over the near term, but additional help from the federal government may be required. Real GDP in Newfoundland and Labrador is expected to grow by 5.1 per cent in 2021 and 4.1 in 2022.

Nova Scotia: Nova Scotia implemented some of its toughest lockdown measures, including border closures and limits on group gatherings at the end of April, as daily increases in COVID-19 cases surged to almost three times the increases recorded in the previous two waves. Assuming that the province’s vaccine rollout stays on schedule, the expected economic reopening in the second half of this year coupled with a strong investment outlook will propel Nova Scotia’s economy to expand by 4.4 per cent in 2021 and 2.1 per cent in 2022.

New Brunswick: If national vaccine distribution targets remain on schedule, the reopening of the United States–Canada border in the second half of 2021 is a possibility. This would give a boost to the province’s recovery, most notably the tourism sector, which has been one of the hardest-hit sectors during the pandemic. It would also allow sectors such as transportation and warehousing to extend their strong recovery this year into 2022. New Brunswick’s economy is forecast to recover by 4.8 per cent this year, followed by 2.2 per cent growth in 2022.

Quebec: Quebec’s labour market was buffeted by the province wide closure of non-essential stores, which led to heavy job losses in December and January. Despite this setback, the labour market regained its footing as the winter receded and many of these job losses were regained. On the expectation that the province will continue to ease restrictions in the coming weeks and months, we forecast a pick-up in GDP growth in the second half of the year, culminating in overall growth in 2021 of 5.6 per cent. An economic expansion of 3.2 per cent is anticipated in 2022.

Ontario: Ontario’s economic growth should benefit from the release of pent-up demand as households spend some of their excess savings when restrictions are eased. At the same time, non-residential construction activity will benefit from General Motors’ decision to invest $1 billion to build electric vehicle capacity in Ingersoll. The province’s exporters will profit from surging U.S. growth linked to massive fiscal and monetary stimulus south of the border. Overall, Ontario’s economy is forecast to advance by 5.6 per cent in 2021, followed by above-trend growth of 3.4 per cent in 2022.

Manitoba: Manitoba’s diverse economy has helped the province cope with the effects of the pandemic. The agriculture sector has performed better than expected: production surged during the last quarter of 2020, and this trend continued in the early part of 2021. Farm exports have been robust thanks to rising commodity prices for key Manitoba crops and strong international demand, especially from Asia. As a result, we expect 2021 to be a much better year despite the current rising case counts and forecast that the overall economy will expand by 4.5 per cent in 2021 and a further 3.3 per cent in 2022.

Saskatchewan: The Saskatchewan economy contracted 6.1 per cent in 2020, the worst recession among all the provinces except Alberta. This year, a strong recovery of 6.3 per cent is expected, with an additional 4.2 per cent gain forecast for 2022. After rising sharply last year, agricultural exports should continue to perform well, buttressed by strong prices for canola and wheat—two key commodities farmed in the province. Potash, too, is poised for another solid year, as demand for the mineral continues to benefit from strong global demand.

Alberta: Alberta’s economic recovery has benefited from the recent rebound in oil prices following a slump in prices in the early part of the spring due to refinery maintenance. We expect prices to keep climbing for the rest of this year and into 2022. At the same time, natural gas prices have been on a decent trajectory, despite the pandemic. Overall, Alberta is forecast to post the strongest rebound off of the steepest decline among the provinces, with a gain of 7.2 per cent in real GDP forecast for 2021 and 5.6 per cent for 2022.

British Columbia: Although a rocky second quarter will slow the economic recovery, we expect a significant rebound in many areas of the economy in the latter half of 2021 and forecast provincial real GDP will grow by 6.0 per cent this year and by 3.2 per cent in 2022. As the summer nears, B.C.’s accommodation and food services sector should benefit from its peak revenue season.

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