These 3 provinces will lead in 2017

By Sarah Cunningham-Scharf | March 28, 2017 | Last updated on March 28, 2017
3 min read

Throughout the year, energy sector strength will be the biggest positive for Canada, says Benjamin Tal, deputy chief economist of CIBC World Markets.

Listen to the full podcast on AdvisorToGo.

“Trump’s policy [will be] very positive as far as the energy sector is concerned,” he explains, noting, “I don’t think gas prices will rise dramatically, given […] we will see U.S. production of oil rising and that will limit the ability of prices to rise. But, even if oil prices rise to, say, around $60 a barrel, Canadian producers can start making some money.”

Already, says Tal, “we’re starting to see more investment in Canadian production, and that’s a good thing. We see the pricing power of producers improving, and prospects regarding Keystone and other pipelines also are positive. So, clearly, investment in energy will be a major positive for the Canadian economic landscape.”

Read: From pipe dream to game on

This bodes well for Alberta, he adds, even though it will continue to “struggle when it comes to employment and investment.” Even so, Tal predicts the province will be the fastest-growing region in terms of overall GDP growth as its rebound accelerates.


Further, “B.C. will continue to do relatively OK—reflecting the fact that this is a very diverse economy. I think its trade relations with China will continue to positively impact the province.”

Meanwhile, “Ontario will do fine,” rounding out the top three provinces in terms of 2017 GDP growth, says Tal. He’s also looking at the manufacturing sector, adding, “it will do OK [based on] the weakness of the dollar and the fact that the dollar probably will continue to go down,” although there may be more risks in 2018.

Takeaway: Don’t expect all oil-producing provinces to strengthen. In a February 2017 report, the Conference Board also says B.C., Ontario and Alberta (plus Saskatchewan) will lead this year, but notes, “The Newfoundland and Labrador economy will continue to struggle” until 2018 or beyond. Recent reports from both TD and RBC make the same call.

Tal concludes, “B.C. and Ontario [will] outperform the rest of the country with Alberta just rebounding from a relatively significant recession.”

Read: Oil industry finds sweet spot for job cuts

The North American picture

Tal’s 2017 outlook for North America is that “the U.S. will outperform Canada due to the short-term impact of Trump’s polic[ies].” He expects U.S. growth to surpass 2.5%.

A negative for Canada will be uncertainty around NAFTA negotiations, he adds. “You will see business investment in Canada still lagging, simply because of the fact that you’re not sure to what extent [and how] NAFTA is going to be renegotiated.”

Read: Potential growing pains for Canada’s economy

As well, “American money will not be coming towards Canada, [which] will limit the ability of Canada to expand. [Canada] had a good second half in 2016 but that’s really just a rebound from the relatively weak first half in 2016.”

The global picture is rosier, says Tal, thanks to “the significant amount of liquidity that was injected into the system over the past six to 12 months by major central banks.” He points to China, the eurozone and Japan, and the U.S. and Canada.

But don’t expect this stimulus to provide a long-term bump, he adds. “This injection of money has been lifting the global economy. But if you generate enough wind, even pigs can fly—and that’s exactly what we’re seeing. This momentum will come to an end by mid-year and basically will stabilize after that.”


Hike gave Fed “more breathing room,” says analyst

The BoC’s unofficial lower-loonie policy

Is Europe next for election shock?

Sarah Cunningham-Scharf