Saskatchewan and Alberta poised to lead growth in Canada in coming years

By: CBoC Team

Ottawa, December 1, 2022Canadian provinces will be seeing constrained economic performance  throughout the remainder of 2022 and through to 2024, although at varying rates according to new research from The Conference Board of Canada. As highlighted in previous forecasts, Saskatchewan and Alberta are projected to lead real GDP growth among the provinces.  

“Rising interest rates are applying pressure across the country, but other more specific factors are affecting provincial outlooks unevenly,” stated Ted Mallett, Director, Economic Forecasting for The Conference Board of Canada. “Although the country as a whole is in for a few quarters of effectively zero growth, prospects for the provinces vary considerably—broadly in keeping with our previous forecasts.” 

Driven by a global reorganization of the potash and uranium markets, as well as significantly improved crop production compared to 2021, Saskatchewan’s real GDP growth is forecast to reach 6.8 per cent in 2022. Production of both potash and uranium in the province is expected to grow over the next few years. The Conference Board of Canada projects the province’s economy will expand an additional 3.6 per cent in 2023 and 2.6 per cent in 2024.  

Alberta’s oil and gas sector had a challenging start to the year, but production rebounded significantly during the second quarter, and The Conference Board of Canada expects the industry’s output has continued to increase during the second half of the year, thanks in part to increased drilling activity. The sector is also responsible for Alberta’s fiscal turnaround this year, with the province now expecting a massive surplus thanks to higher-than-expected energy prices. Alberta’s real output for 2022 is forecast to expand 4.7 per cent, with anticipated growth of 2.8 per cent in 2023 and 2.7 per cent in 2024. 

British Columbia’s housing sector stalled significantly under the weight of higher borrowing costs, with sales and prices falling significantly since the beginning of 2022. On a more positive note, the province’s tourism sector is approaching pre-pandemic norms after a busy summer season. Real GDP in the province is expected to grow 2.6 per cent in 2022, 1.0 per cent in 2023 and 2.9 per cent in 2024.  

After a challenging 2021, Manitoba’s economy is projected to grow 3.7 per cent in 2022 driven by a recovery in the agriculture sector as crop production is estimated to have fully recovered. Looking ahead, high and still rising interest rates will weigh heavily on economic activity next year as GDP volume growth is projected to slow to 1.8 per cent in 2023 and 2.4 per cent in 2024.  

Prince Edward Island continues to face the highest inflation in the county, but that hasn’t impacted population growth which increased 3.5 per cent as of July 1, 2022. International migration has been a strong driver of population growth, followed by interprovincial migration. Real GDP growth for the province is projected to be 3.4 per cent this year, followed by 2.0 per cent next year and 2.43 per cent in 2024.  

The lifting of public health restrictions in Nova Scotia led to resurgence in tourism, which, combined with a healthy export market, have contributed to growth. Looking ahead, however, rising shelter and energy costs have squeezed consumer’s pocketbooks causing consumption to slow. GDP in real terms for the province is forecast to expand 2.5 per cent in 2022, followed by 1.1 per cent next year and 2.4 per cent in 2024.  

New Brunswick continues to see strong population growth from both international and interprovincial migration, which increased 2.7 per cent as of July 1, 2022. New Brunswick’s economy is forecast to grow 2.1 per cent in 2022, followed by 0.6 per cent in 2023 and 1.7 per cent in 2024 as inflation subsides.  

Ontario’s economy started the year strong as public health restrictions subsided helping to propel the economy forward, however it has slowed in the second half of the year. The silver lining in the province is the historic opportunity for investments, particularly in auto manufacturing. This optimism isn’t enough to boost the economy, as real GDP growth in 2023 is forecast to be 1.1 per cent, growing to 2.9 per cent in 2024.  

The combination of elevated inflation, waning consumer confidence, and higher borrowing costs is weighing down consumer spending, particularly on durable and semi-durable goods in Quebec. Spending on services is also softening, although demand for travel and recreation services has so far benefited from the tailwinds of the economic reopening. Real GDP growth for the province is projected to be 2.9 per cent in 2022, followed by slower gains of 0.6 per cent in 2023 and 2.5 per cent in 2024.     

Newfoundland and Labrador’s growth has slowed, in part due to mixed results from the oil and gas sector. Higher-than-expected oil prices are boosting government revenues, while weaker production from depleting reserves and the Terra Nova platform maintenance, will weigh on the provincial economy’s ongoing recovery from the pandemic. The Conference Board of Canada forecasts real GDP to expand only 0.3 per cent in 2022 but followed by stronger gains of 3.2 per cent in 2023 and 2.5 per cent in 2024. 

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