This quarterly economic forecast provides highlights of the Provincial Outlook report, which presents the short-term outlook for Canada’s provinces.
Every province in Canada will record a solid economic recovery this year, as the return of strict restrictions on activity in the early spring combined with rapid gains in vaccinations is gradually reducing 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.
Newfoundland and Labrador’s fiscal situation remains dire, as the pandemic and ensuing spending by the provincial government to support the economy aggravated a situation that was bleak even 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.
The delay in the recovery in international travel to next year will hurt tourism activity across the Atlantic provinces this summer. The recovery in Quebec will benefit from ongoing strength in the construction sector, although labour shortages remain a problem. The province’s exporters should profit from the surge in the U.S. economy linked to massive fiscal and monetary stimulus. However, Quebec’s aerospace industry will remain under pressure due to ongoing weakness in air travel.
Ontario’s red-hot housing market will cool down in the second half of this year and into 2022, as soaring prices in Toronto, in Ottawa, and elsewhere have led to acute affordability issues. The global economic recovery has solidified raw material prices, providing a boost to the recovery in Manitoba and Saskatchewan. Rising agricultural prices will help Saskatchewan record one of the strongest GDP gains among the provinces this year.
Oil prices have also surged in recent months, helping to boost energy sector profits and investment in Alberta from rock-bottom levels. B.C.’s key tourism industry will start to recover this year, but most of the increased travel volumes will come from visitors from other provinces, as the return of international travellers likely remains a 2022 story.