Analyzing GDP growth across the country: Western Canada takes the lead
Ottawa – Western Canada can expect the fastest-growing provincial economies in the country this year and again in 2015, with Alberta resuming its customary place at the top of the list. The near-term outlook is looking increasingly...
Ottawa – Western Canada can expect the fastest-growing provincial economies in the country this year and again in 2015, with Alberta resuming its customary place at the top of the list. The near-term outlook is looking increasingly positive for Manitoba and British Columbia, while Saskatchewan’s growth will slow sharply, according to the Conference Board’s Provincial Outlook: Spring 2014.
“Economic prospects have brightened for several provinces, as the expected strengthening in the US economy will help boost real GDP growth on this side of the border over the next two years,” said Marie Christine Bernard, associate director, Provincial and Territorial Forecast. “Atlantic and Central Canada are expected to gather more momentum in 2015, and even stronger growth is expected in Western Canada.”
Alberta’s economy will grow by 3.5% in 2014 – the fifth consecutive year in which the economy’s expansion comes in above the 3% level. Future growth will depend increasingly on exports and consumer spending rather than investment.
Economic growth is set to pick up speed in British Columbia, with real GDP forecast to gain 2.3% this year. The forestry industry is expected have another strong year, boosting output in wood products manufacturing. The job market has started to improve and employment growth is expected to do well over the near term.
Manitoba’s increased public infrastructure spending is providing stimulus to the economy, supporting growth of 2.1% in 2014. However, metal mining will see little growth and crop production is expected to decline this year.
Saskatchewan, which has been a growth leader among the provinces in recent years, is expected to see real GDP advance by just 0.8%. Potash prices are still low and production has been cut, while the agriculture sector will feel the after-effects of the abundant crop of 2013. Yet Saskatchewan will continue to add jobs, and its unemployment rate – 4.3% – will continue to be the lowest of any province.
Both Ontario and Quebec are wrestling with large fiscal deficits that will limit the ability of the provincial governments to add to economic output. Ontario’s real GDP growth will improve to 1.8% as the US recovery picks up speed, but growth will be restrained by weak investment. A loonie that is expected to hover around US$0.91 level will benefit exporters in the province.
The Quebec economy will advance at a better pace in 2014 than in the previous two years. Real GDP is forecast to increase by 1.7% on the back of stronger growth in household spending and an improvement in net exports. Growth in government spending, which accounts for nearly a quarter of Quebec’s GDP, will stall this year.
After struggling for the past three years, Nova Scotia’s economy will expand by 2.3%, fuelled largely by natural gas production from the Deep Panuke offshore field. In addition, Irving Shipbuilding has begun work on an upgrade to the Halifax shipyard to get it ready to build navy combat ships starting in 2015.
New investment is boosting the forestry sector in New Brunswick. The provincial labour market, which has been haemorrhaging jobs over the past four years, is beginning to recover. Along with an improved investment outlook, consumer demand should pick up, allowing real GDP to advance by a modest 1.1% this year
Newfoundland and Labrador’s expansion is cooling. After leading all provinces in real GDP growth last year at 7.9%, Newfoundland and Labrador’s economy is expected to expand by 1.3% in 2014. The construction industry is expected to contract in the next two years, due primarily to the completion of Vale’s nickel-processing facility and a drop in housing investment.
Prince Edward Island’s economy is being weighed down by a large contraction in the construction sector this year, which will limit overall real GDP on the Island to an increase of 1.3% in 2014.
Nationally, the Canadian economy is expected to grow by 2.1% in 2014.