Ottawa, May 31, 2022 – Real gross domestic product (GDP) is set to rise in Canada 4.0 per cent in 2022 with slightly more subdued gains in 2023 of 3.3 per cent amid a myriad of domestic and global factors according to new research from The Conference Board of Canada. Saskatchewan and Alberta are projected to lead GDP growth in Canada this year, driven by the energy sector and other key commodities that have all been affected to some extent by Russia’s invasion of Ukraine.
“The growth in consumer spending will begin to slow as interest costs impact borrowers’ wallets but continuing high employment and a strong tailwind for wage growth will keep Canada’s economy moving forward,” said Ted Mallett, Director, Economic Forecasting, The Conference Board of Canada. “Trade disruptions brought by the Russian invasion of Ukraine and COVID’s resurgence in China has sent prices soaring, creating a domino effect on consumer inflation.”
Saskatchewan’s economy had shrunk 0.3 per cent in 2021, almost entirely due to a devastating drought that limited output in the agricultural sector, however The Conference Board of Canada anticipates a significant recovery in 2022 with GDP volumes to grow 7.9 per cent. Although agricultural yields will be below average, soaring wheat prices have led to an increase in seeded area on farms.
Following a significant contraction in 2020, The Conference Board of Canada forecasts Alberta’s GDP to grow 6.6 per cent in 2021 and 4.7 per cent in 2023. The oil and gas sector is anticipated to play a major role in the province’s growth, however, there are mitigating factors that could constrain its potential. Alberta is also set to see major investment in petrochemical manufacturing, with construction of three major facilities set to begin over the next two years.
Newfoundland and Labrador’s economy grew by 1.2 per cent last year. The Conference Board of Canada forecasts GDP growth to moderate further at just 0.1 per cent this year but followed by a strong 4.2 per cent rebound in 2023. Newfoundland and Labrador’s slow growth is in large part due to challenges in the oil and gas sector, as new drilling activities at Hibernia are suspended until 2022 and production at the Terra Nova site will only restart towards the end of the year.
Despite ongoing risks, there is reason for optimism in Ontario’s economy as GDP is forecast to expand 4.0 per cent this year and 3.2 per cent in 2023. This is partly due to the outlined infrastructure spending in the most recent provincial budget, which over the next decade will bring $25.1 billion to support the planning and construction of highway expansion.
Quebec’s pandemic-related restrictions that prevented several service industries from mounting a full recovery in 2021 have now mostly been lifted, which should help to drive growth in industries such as hospitality, transportation and warehousing. As a result, real GDP growth is expected to grow 3.4 per cent in 2022 and a further 2.6 per cent in 2023.
Despite growing by just 1.2 per cent in 2021, The Conference Board of Canada expects Manitoba’s real GDP to be in much better shape over the next two years. Spurred by a return to growth in the resource sector, increases in manufacturing, and a major jump in transportation and warehousing will see Manitoba’s real GDP grow by 5.4 per cent in 2022, followed by another good year of 2.9 per cent growth in 2023.
British Columbia’s labour market recovery has been among the swiftest in Canada but is now suffering from this success as severe worker shortages have become an impediment to growth. Worker shortages bode poorly for the housing sector. Housing starts are projected to fall by 18.9 per cent in 2022 and 5.6 per cent in 2023. Despite this, The Conference Board of Canada forecasts B.C.’s real GDP to grow by 3.1 per cent in 2022 and 3.0 per cent in 2023.
Consumer price index (CPI) inflation continues to increase and be a major challenge in Prince Edward Island. In March, inflation in the province was running at an annual rate of 8.9 per cent, while the national average was 6.7 per cent. Despite this, The Conference Board of Canada forecasts that P.E.I.’s economy will continue its path of recovery with a GDP growth of 3.6 per cent in 2022 followed by a slightly slower pace of 3.0 per cent in 2023.
Nova Scotia’s economic recovery from the pandemic will continue, with real GDP expected to expand 2.7 per cent this year and 2.4 per cent in 2023. The province removed all remaining COVID-19 restrictions in March, which is expected to boost the service industry, particularly tourism, which has lagged in recovery and should return to pre-pandemic levels by next year. The seafood processing sector will also enjoy stronger demand as indoor dining returns, although exports to Europe may be affected by the Russian–Ukraine war.
The Conference Board of Canada forecasts New Brunswick’s economy to grow 2.3 per cent this year and 2.2 per cent in 2023. Impressive gains in total population, a strong outlook for retails sales, and recoveries in the labour market will all contribute to the province’s economic growth this year. New Brunswick’s CPI rose 3.8 per cent in 2021 and we expect it to rise even further this year, jumping 5.7 per cent, led by higher prices for commodities, food, shelter, and transportation.
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