Economic outlook: Western provinces to experience economic boost over next two years
Ottawa,ON – The demographic and economic clout of the Western Canadian provinces is expected to continue to grow, according to the Conference Board of Canada’s Provincial Outlook-Winter 2012. The recently-released 2011 Census...
Ottawa,ON – The demographic and economic clout of the Western Canadian provinces is expected to continue to grow, according to the Conference Board of Canada’s Provincial Outlook-Winter 2012. The recently-released 2011 Census revealed that the western provinces are a magnet for new arrivals, and strong commodity prices are expected to boost the western economies over the next two years.
“The recent economic slowdown is now barely noticeable in Western Canada,” said Marie-Christine Bernard, associate director, provincial outlook. “Despite concerns over global growth and the lasting fiscal problems in Europe, growth in the Western Canadian provinces is expected to be a full percentage point stronger than in the rest of the country this year and next.”
The Canadian economy is forecast to post real growth in gross domestic product (GDP) of 2.1% in 2012. All four western provinces can expect growth at or above that level this year, while none of the other six provinces will grow by more than 1.9%.
Alberta is expected to lead all provinces both in 2012 and 2013, with economic growth forecast to be 3.3% this year and 4% next year. Global oil prices are expected to remain high, boosting construction and expansion of oil sands projects. By 2013, Alberta’s unemployment rate is expected to be down to 4.5%.
Saskatchewan is already experiencing tight labour markets and its unemployment rate in 2013 is forecast to match that of Alberta. After a gain of 5.2% last year, Saskatchewan’s real GDP growth will ease to 2.6% in 2012 and accelerate to 3.5% next year. Mining and manufacturing are among the province’s strongest sectors this year.
Manitoba’s agriculture, manufacturing and utilities sectors are expected to perform well in 2012. In particular, agriculture is expected to bounce back following the 2011 floods. Solid population growth is bolstering demand for housing and retail sales. Overall, the provincial economy is expected to grow by 2.7% in 2012 and by 2.6% in 2013.
British Columbia is being held back by external factors, such as moderating growth in China and a modest improvement in the US housing market, which will finally generate some gains in the forestry industry. But restrained public sector spending will dampen construction. All in all, British Columbia’s economy will grow by 2.1% this year, and real GDP growth will accelerate to 3.6% in 2013.
Ontario’s economy will feel the pinch of deficit-reduction efforts at both the federal and provincial levels. Ontarians’ real after-tax incomes will post only a small gain in 2012 as both employment and wages advance at a moderate pace. As a result, Ontario’s economy will grow by just 1.9% in 2012, although stronger growth of 2.8% is expected in 2013.
Quebec has a few bright spots in its outlook, notably strong business investment in Northern Quebec’s mining sector. But lower public infrastructure investment, a decline in housing starts, a weak labour market, and declining real disposable income will limit real GDP growth to 1.4% in 2012.
The Maritime provinces face modest growth prospects. Nova Scotia’s economy will grow by 1.5% in 2012, but 2013 offers a brighter outlook thanks to new natural gas production and stronger manufacturing. New Brunswick can also expect growth of 1.5% this year, following a long-awaited rebound in the job market. The end of fiscal stimulus in Prince Edward Island will limit the Island’s real GDP growth to 1.4% in 2012.
Newfoundland and Labrador’s economy is in transition. The oil and natural gas industry has reached peak production, but iron ore mining in Labrador is on the upswing. The province’s economy is forecast to grow by just 0.7% in 2012, before accelerating to 2.1% in 2013. Strong employment and wage gains mean that the province is attracting workers rather than losing them.