Reversal of economic fortune for Canadian cities
Toronto, Vancouver, Halifax will record the fastest economic growth rates this year among the 13 census metropolitan areas (CMAs) covered in The Conference Board of Canada's Metropolitan Outlook: Spring 2015. Meanwhile, long-standing economic leaders, Calgary and Edmonton, are expected to fall into recession in 2015.
“The collapse in oil prices has significantly altered the economic outlook among Canada’s largest cities. Most other cities will see their economic fortunes improve this year, thanks largely to a weaker Canadian dollar and a stronger U.S. economy,” said Alan Arcand, Associate Director, Centre for Municipal Studies. “On the other hand, the slump in oil prices will take its toll on the economies of Calgary and Edmonton and to a lesser extent on Regina and Saskatoon.”
- Toronto, Vancouver, and Halifax will be the fastest growing metropolitan economies in the country this year.
- Hit hard by the slump in oil prices, the economies of Calgary and Edmonton are expected to shrink by 1.2 per cent and 0.8 per cent respectively.
- Aside from Calgary, Edmonton, Regina and Saskatoon, most of the 13 census metropolitan areas covered in this edition of the Metropolitan Outlook can expect improved economic growth this year.
Toronto’s economy is expected to expand by 3.1 per cent in 2015, making it one of the fastest growing metropolitan economies in the country this year. The CMA’s manufacturing and transportation and warehousing sectors will benefit from stronger U.S. demand and a weaker loonie. Toronto can also expect a boost in tourism activity when the region hosts the Pan Am/Parapan Am Games this summer.
Widespread gains across all sectors of Vancouver’s economy will lead to growth of 3.1 per cent this year. The manufacturing sector will be kept busy by work on new non-combat vessels, while construction activity is set to increase thanks to an upward trend in housing starts and a healthy non-residential sector. At the same time, continued gains in employment should keep consumers spending.
Halifax joins Toronto and Vancouver, as one of the economic growth leaders this year, with real GDP growth of 3.1 per cent. The local manufacturing sector is expected to see a big increase in output this year, as production begins at the Halifax Shipyard on the first set of new vessels for the Royal Canadian Navy. Moreover, both residential and non-residential construction activity is expected to be healthy.
Hamilton’s manufacturing sector will also benefit from a stronger U.S. economy and weaker Canadian dollar, so its recovery is expected to continue this year. At the same time, higher numbers of tourists as a result of the Pan Am/Parapan Am Games will help boost growth in the city’s tourist-oriented industries. In all, Hamilton’s economy is forecast to expand by 2.7 per cent in 2015.
Real GDP growth in Montreal will reach 2.6 per cent in 2015. The construction sector is expected to be a growth leader, thanks to major infrastructure projects such as the Champlain Bridge replacement.
Winnipeg’s economy is expected to grow by 2.5 per cent in 2015, as services growth stays healthy and non-residential construction picks up. This should help fuel employment increase of 2.2 per cent in Winnipeg, the biggest gain since 2010.
Québec City’s real GDP growth is forecast to hit a five-year high of 2.4 per cent in 2015, thanks to the ongoing recovery in manufacturing and stronger services growth.
Driven by a turnaround in the public sector and strong manufacturing, Victoria’s real GDP is forecast to rise by 2.1 per cent in 2015, the first time since 2007 that growth will surpass 2 per cent.
Prompted by the decline in oil prices, Regina’s economic growth will slow to 1.9 per cent this year, down from 5 per cent in 2014. Employment increases will remain below 1 per cent for the second straight year in 2015, and this will boost the unemployment rate to a five-year high of 4.7 per cent.
Following gains exceeding 6 per cent in five of the past six years, Saskatoon’s economic growth is forecast to slow to a post-recession low of 1.8 per cent in 2015. The slowdown will be led by a dramatic cooling in Saskatoon’s resources, agriculture and utilities industry, due to lower oil prices.
Ottawa-Gatineau’s economy continues to struggle in the face of public sector austerity. In fact, the public administration sector is expected to shrink further in 2015, but this will be offset by strength in non-residential construction and in high-tech services. All in all, real GDP growth in Ottawa-Gatineau is projected to reach 1.3 per cent in 2015.
Declining oil prices will put Edmonton and Calgary in recession in 2015. Calgary’s economy is expected to shrink by 1.2 per cent this year, while Edmonton’s real GDP is forecast to fall by 0.8 per cent. The energy sectors in both cities will decline, but other sectors will also feel the pinch from lower oil prices, including construction, transportation and warehousing, and wholesale and retail trade. But with oil prices expected to recover somewhat next year, modest economic growth is anticipated for both cities next year. Specifically, Calgary’s real GDP is forecast to rise by 1.5 per cent and an expansion of 1.3 per cent is projected for Edmonton in 2016.
SOURCE: Conference Board of Canada