Canadian Provinces Shifting Gears for Economic Growth

Ottawa, November 18, 2021The Conference Board of Canada’s Provincial Outlook shows recovery from the COVID-19 pandemic will vary greatly across the provinces, with Alberta leading the charge in 2022. Vaccine passports, now the primary public health measure for all provinces, are allowing people to resume more leisure and business activities. As the economy reopens governments will shift from short-term stimulus to long-term planning.

“Consumers have plenty of built-up savings in their pockets and businesses have many reasons to invest in preparation for the post-pandemic economy,” says Ted Mallett, Director, Economic Forecasting, The Conference Board of Canada. “Coupled with solid commodity prices and strong U.S. demand for Canadian exports, we will see robust economic growth for the remainder of 2021 and through most of 2022.”

The Conference Board of Canada predicts that the economy will finish the year with a 5.1 per cent gain in real GDP. Growth of 4.4 per cent is forecast for next year but the pace of growth will slow markedly in 2023 due to weak economic fundamentals.

Consumers are going to drive much of the economic activity in 2022, leading to a 5.9 per cent increase in real household spending. That spending will shift from home improvements and other goods, to services like restaurants and recreation. Hard hit clothing retailers will also see a rebound as returning office workers renew their wardrobes.

Newfoundland and Labrador is expected to see the slowest rate of recovery due to the drop in offshore oil production and a resurgence of COVID-19 infections and coinciding health restrictions. Employment has also been slow to recover in the province, increasing by about 2.8 per cent in 2021 and 2.6 per cent in 2022. It’s only expected to reach its pre-pandemic peak in the middle of next year, ahead of GDP growth.

Manitoba and Ontario, whose economies have suffered under strict COVID-19 health measures, will experience growth at about the national average over the next two years, as restrictions are lifted. In Quebec and the Maritimes, demographic struggles such as ageing populations are leading to either slowing or declining labour force numbers.

Alberta is expected to benefit from rising oil prices, increased pipeline capacity and strong U.S. demand resulting in a 6.1 per cent increase in real GDP in 2022. The province will continue to top the national average with a 2.9 per cent gain in 2023. While the province’s employment has reached pre-pandemic levels, sectors like tourism and hospitality have not rebounded as strongly. Agriculture and oil patch employment has also been lagging, due to the poor growing season in 2021 and oil and gas workers’ hesitancy to return to the industry following the second major downturn since 2014.

British Columbia also had a fast rebound in employment, with job growth expected to continue through 2023. However, the labour market is struggling as demand for services is rising, and the hospitality and tourism industries grapple with gaps in the workforce. B.C.’s natural resource industries are also lagging with the drop in lumber prices and the closure of salmon fisheries taking a toll on employment numbers. Professional services and retail are expected to cushion the province’s economy, though, and the provincial government’s projected deficit has been cut almost in half. The province’s real GDP is expected to grow by 4.6 per cent in 2022.

The full forecast is available for subscribers, here. Media should contact media@conferenceboard.ca for access.

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