An economic slowdown is on the horizon for many Canadian provinces as pressures weigh on consumers and businesses, according to new research from The Conference Board of Canada.
“Despite our outlook pointing to growth in all regions, a recession is likely for much of the country later this year,” according to Ted Mallett, director of economic forecasting at The Conference Board of Canada. “Commodity producing provinces will perform better than construction and manufacturing, while further growth is expected in travel and recreation sectors which still have ground to make up from the pandemic.”
A busy tourism season is expected this year for Newfoundland and Labrador, but construction will be the main driver of economic activity in the province this year. Several major projects are boosting prospects, including the West White Rose offshore oil project and the Marathon Gold mine. Despite these positives, oil production snags will hold the province’s GDP to growth of just 0.1% in 2023 before expanding 1.3% in 2024.
Hurricane damage to cottages and resorts will hurt capacity in Prince Edward Island’s tourism industry, at least in the beginning of the summer but with the effects of Hurricane Fiona diminishing, the outlook is encouraging as the province expects a busy tourism season. The province’s GDP is expected to rise 1.7% both in 2023 and 2024.
Several of Nova Scotia’s industries will see stagnant or negative growth this year, as global slowdowns are expected to hit manufacturing sectors, while retail and wholesale trade output will also decline. The province is, however, seeing strong international migration which is boosting the workforce and population and helping to boost GDP to growth of 0.7% in 2023 and 1.2% in 2024.
Population growth is also benefiting New Brunswick, which is benefiting from the labour market boost in a variety of sectors. The upward pressure on wages and salaries in 2022 is expected to break this year as inflation eases and employment growth moderates in the province. The Conference Board of Canada forecasts GDP growth to be 1.0% in 2023 before easing slightly to 0.6% in 2024.
Across industries, in Quebec, the picture is mixed. A slowdown in the United States will weigh on demand for some key manufactured products including aluminum and iron ore. On the upside, Quebec’s abundant supply of renewable energy makes the province an attractive location for firms seeking ways to reduce carbon emissions. Additionally, recent job growth has pushed up Quebec’s employment rate which combined with strong wage growth, is supporting household incomes. The Conference Board of Canada anticipates GDP in the province to grow just 0.6% in 2023 and 1.1% in 2024.
High-contact services sectors in Ontario will also see strong output growth this year as they continue to recover from the pandemic, while tourism will give a boost to certain regions of the province, as both domestic and international travel is expected to pick up. Despite these positives, GDP is forecast to grow 0.9% in 2023 before increasing a further 1.4% in 2024.
Manitoba’s GDP is expected to increase 2.2% in 2023 and a further 1.2% in 2024, driven by strong performance that’s anticipated in the agriculture sector, but as always the industry is heavily reliant on weather patterns. The province is also boosted by investment at the CentrePort Canada rail park.
Saskatchewan’s economy is expected to maintain its momentum throughout 2023, guided by the mining sector. Although potash prices have decreased, fertilizer producers don’t anticipate a slowdown in production. Non-metal mining will likely become the province’s largest mining subsector. GDP in the province is expected to increase 2.5% in 2023 and an additional 1.9% in 2024.
Strong net migration will continue benefiting Alberta, which is expected to mitigate the impact of an impending recession on the country, stimulating consumer spending and job creation despite the high interest rates. The province will continue benefiting from strong growth in the oil and gas sector, although at a slightly slower rate than originally forecast. The province’s GDP is expected to grow 2.4% in 2023 and 1.9% in 2024.
Ongoing investment projects in British Columbia will buoy the province this year. The LNG Canada, Coastal GasLink, and Trans Mountain pipelines, as well as the Site C dam, are nearing completion, but ongoing work on these projects will prevent a more severe decline in construction output. But with a strained consumer sector, The Conference Board of Canada expects the province’s growth to creak under the weight of higher interest rates, with GDP rising just 0.7% in 2023 and 0.7% in 2024.