The Conference Board of Canada’s Provincial Economic Outlook was released on Tuesday, providing the medium-term economic outlook for the provinces, including forecasts for gross domestic product (GDP) and labour market conditions.
After increasing by 1.6 per cent this year, growth in the Canadian economy is expected to reach 1.8 per cent in 2020 as energy investment turns around and consumer spending picks up. While some provinces will benefit from renewed investment in energy, the ability to move more oil to market, and better population growth, other regions continue to feel the effects of slowing global growth and strained trade relations with China.
Alicia Macdonald, Associate Director of Economic Forecasting at The Conference Board of Canada, provides this insight into today’s release:
“We are seeing solid economic growth in Québec and Atlantic Canada this year but as we head into 2020, we expect the strongest economic gains to shift west with British Columbia and Alberta becoming the fastest growing economies in the country. These two provinces will benefit from investment in the energy sector while the outlook for many other provinces is being negatively impacted by slowing global growth.”
Key findings, by province:
Newfoundland and Labrador’s economy is expected to grow by 4.5 per cent this year, its strongest performance since 2013. The solid growth this year is underpinned by unexpectedly strong gains in the oil and gas industry.
Prince Edward Island continues to outpace growth in the national economy—for a fifth year in a row. Underpinning this feat are solid population gains. A sustained influx of international immigrants has made the Island the fastest-growing province in the country and well on its way—likely a year ahead of schedule—of reaching the government’s 2017 goal of 160,000 residents by 2022.
Nova Scotia is forecast to grow at 2.1 per cent in 2019, its strongest pace in over a decade, before slowing to 0.9 per cent growth in 2020. An immigration influx in 2018 has helped buoy household demand and fill labour shortages.
New Brunswick kicked off the year with a surge in job creation and its economy is set to expand 1.4 per cent this year but will head into 2020 with a little less wind at its sails as weaker population growth will slow household spending.
Québec is poised for another strong year of economic growth, marking a third straight year of above 2.0 per cent growth—making the three year streak the first since 1998. Economic performance will cool over the next few years. Population growth is slowing due to a significant reduction in immigration. At the same time, the province’s population is aging; Québec has the highest proportion of individuals aged 65 and over outside of Atlantic Canada. These two factors will limit labour force growth and constrain economic growth in the province going forward.
Ontario’s real GDP growth is forecast to slow to a pace of 1.6 per cent in 2019 and 1.5 per cent in 2020. Most domestic demand factors—such as household spending and residential investment—have started to weaken. Despite the slowdown in economic growth, job creation remains strong with the province adding over 200,000 new jobs over the first 10 months of 2019 with much of the gain concentrated in full-time work.
Manitoba’s economic growth is expected to be soft in 2019 and 2020 due to temporary factors. Declines in business investment and subdued growth in the manufacturing sector are expected to drag on real GDP growth, which is expected to increase by 0.9 per cent this year and 0.7 per cent in 2020.
Saskatchewan has slipped into a mild recession this year. Although the 2019 outlook for agriculture and mineral fuels has improved slightly since our last forecast, the primary sector will remain a drag on economic activity in the province. A mild rebound is in store for the province next year with economic growth hitting 1.0 per cent.
Alberta’s economy is set to rebound in 2020 as the Trans Mountain Expansion (TMX) project officially begins construction and an improved outlook for future takeaway capacity incentives a turnaround in energy investment. The province will see economic growth of 2.4 and 3.1 per cent in 2020 and 2021, respectively, after a year of stalled growth in 2019.
British Columbia’s outlook remains bright. Real GDP is expected to expand 2.6 per cent in 2019 and 3.0 per cent in 2020. Although this represents a slowdown from the 3.3 per cent average annual growth rate between 2014 and 2017, the province will remain among the provincial growth leaders in the next two years. Helping boost growth are several large-scale investment projects including LNG Canada, the TMX Pipeline and the Site C Dam development.