Provincial Outlook Economic Forecast: Winter 2005

This quarterly economic forecast presents the short-term outlook for Canada’s provinces.

Document Highlights

• The stronger loonie will keep Canadian economic growth at bay, with real GDP rising by 2.5 per cent in 2005 and 2.8 per cent in 2006.
• New residential construction will remain strong this year but will come down for most provinces. Manitoba and Alberta are notable exceptions.
• Alberta will again lead the provinces in GDP growth in 2005 and will rank a close second in 2006 as it intensively develops its oilsands extraction capacity.
• Ontario will face several challenges this year, such as the strong Canadian dollar, volatile energy prices and softening global demand.
• Family-oriented provincial fiscal measures will bolster retail spending in Quebec, but the weakness in exports will limit real GDP growth to 2.3 per cent in 2005.
• The recent approval of two energy projects has brightened the near-term outlook in Atlantic Canada, but declining petroleum production will limit growth to 2.3 per cent this year.
• British Columbia’s economy will weaken over the near term as softening housing construction in both Canada and the United States takes a bite out of manufacturing activity and holds back overall economic growth to 2.7 per cent in 2005 and 2.5 per cent in 2006.