Uneven Growth Across Canadian Provinces as Prices, Rate Increases Continue to Weigh on Consumers
OTTAWA, Aug. 28, 2023 (GLOBE NEWSWIRE) — Canadian provinces will be weighed down by various common pressures impacting growth throughout the rest of 2023 and into 2024, but localized factors will help some realize stronger GDP growth than others, according to new research from The Conference Board of Canada.
“Consumer spending defied expectations earlier in the year, but the pool of savings that buoyed Canadians finally looks like it has run out of its capacity to sustain overall economic growth,” stated Ted Mallett, Director, Economic Forecasting at The Conference Board of Canada. “Consumer activity is also being drained by higher borrowing rates which are steadily working their way through the system as mortgage terms get renewed.”
Alberta’s agriculture industry is facing challenges due to dry spells in southern parts of the province, resulting in crop condition ratings well below recent averages in the crucial growing season. This poses a significant downside risk for the industry. However, the province is proving to be resilient, in part driven by its sustained population growth, which has translated into strong employment gains. Real GDP for the province is forecast to increase 2.7 per cent in 2023 and 1.9 per cent in 2024.
Population growth in Prince Edward Island has played an important role in helping the economy expand and relieved labour shortages in many industries but has also negatively pressured housing and healthcare. International travel to the island has recovered to nearly 2019 levels, which is expected to help GDP increase 2.6 per cent in 2023 and an additional 1.7 per cent in 2024.
Manitoba’s mining industry is seeing a boost as production recently started at Harrowby, the province’s first potash mine. Manufacturing should also see a boost, as New Flyer was awarded a significant contract to build electric buses. Similar to other regions, the province is seeing significant population growth. Manitoba’s GDP is expected to increase 2.5 per cent in 2023, and 1.2 per cent in 2024.
Saskatchewan’s labour market continues to be an economic strongpoint with some of the most compelling employment gains in the transportation and warehousing sector over the past year as population growth continues to surge. Saskatchewan is also primed to take advantage of a bullish uranium market. With global supply diminishing and demand rising, several producers have chosen an excellent time to resume uranium operations. These factors are expected to help the province’s GDP rise 1.5 per cent in 2023 and a further 2.0 per cent in 2024.
Nova Scotia has been dealing with a series of natural disasters dating back to Hurricane Fiona. Despite the meteorological woes, Nova Scotia’s sturdy population growth and consumer spending have helped the province navigate through a tough period in which much of the country has grappled with inflationary pressures and rising interest rates. The province’s GDP is forecast to grow 1.4 per cent in 2023 and a further 1.0 per cent in 2024.
Non-residential investment is the big news, with electric vehicle battery production set to begin in Ontario in the coming years on the Stellantis–LG Energy and Volkswagen battery manufacturing plants. Consumer spending growth in the province is expected to wane, and households that need to renew mortgage rates will feel the biggest pinch. GDP in the province is forecast to increase 1.3 per cent in 2023 and an additional 1.0 per cent in 2024.
Population growth continues to be strong in New Brunswick, with international and interprovincial migration expected to be well above pre-pandemic levels. This year’s boost in population and employment will prop up real output in the services sector, with public administration, health and social assistance, and professional, scientific, and technical services also expected to see strong growth. The province’s GDP is forecast to grow 1.2 per cent in 2023 and an additional 0.6 per cent in 2024.
The strike at British Columbia’s ports brought most marine trade in and out of the province to a halt, which will impact the province’s trade data this year and have spillover effects to other provinces. The worst wildfire season on record has spurred evacuations throughout the province and will have a material impact on economic output this year, not least for the forestry and tourism sectors. These among other factors weigh on GDP for the province, which is forecast to increase 1.1 per cent in 2023 and 1.5 per cent in 2024.
Despite the near-term headwinds in Quebec, opportunities for growth are present as demand for several of Quebec’s key manufactured products is expected to rise over the next few years. However, demographic pressures, underpinned by population aging, will be especially acute in Quebec. GDP for the province is expected to increase 0.8 per cent in 2023 and a further 0.7 per cent in 2024.
Several ongoing construction projects and significant investment announcements will keep construction activity healthy this year in Newfoundland and Labrador. Population growth is also occurring rapidly, but as a result of oil production capacity constraints there are more negatives than positives as GDP is forecast to stall in 2023, before increasing by 1.6 per cent in 2024.
The Conference Board of Canada
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