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OTTAWA – Canadian provinces are feeling the pressures of restrictive interest rates, which have had a significant impact on consumer and business spending power, according to new research from The Conference Board of Canada. Real GDP growth in Canada is forecast to be only 0.9 per cent in 2023, followed by a weaker 0.6 per cent in 2024.
“Strong population growth across the country continues to be a major positive for the economy, helping to sustain employment and economic activity,” according to Ted Mallett, Director, Economic Forecasting at The Conference Board of Canada. “Still, many households are feeling the pinch, high borrowing costs have added to inflationary pressures resulting in sagging housing markets across most provinces.”
Prince Edward Island’s agriculture sector struggled in 2023 with wet conditions hurting crop yields, while strong population growth continues to sustain economic growth despite high interest rates dampening growth. The province’s GDP is forecast to increase 2.7 per cent in 2023 and an additional 1.0 per cent in 2024.
Despite the economic downturn, business investment in Alberta is expected to remain resilient into next year. This year’s growth can be attributed to elevated investment in the non-residential sector of the economy, particularly in the energy sector. The province’s strong economy is closely tied to population and employment growth, which are providing a solid foundation for consumer spending. Alberta’s GDP is expected to increase 2.2 per cent in 2023 and a further 1.5 per cent in 2024.
Manitoba’s manufacturing sector is seeing strong growth, with New Flyer having secured a five-year battery-electric bus contract with the Toronto Transit Commission, to go along with the ongoing $2.5-billion CentrePort Canada rail park project. In addition to this, early-stage production has begun at PADCOM’s Harrowby potash mine. These factors will help the province’s economy grow 2.1 per cent in 2023, and a further 0.4 per cent in 2024.
Rapid population growth in New Brunswick has been driven by unprecedented gains in both net international and net interprovincial migration. This surge has fueled growth in the province’s labour market, which will increase at the highest rates since the mid-1980s. New Brunswick’s GDP is anticipated to increase by 1.5 per cent in 2023, and then stall in 2024 as the economy hits the brakes.
Potash mining in Saskatchewan had a sluggish start in 2023 due to a significant drop in fertilizer prices from their 2022 peak. National production had been steadily declining over the past year until July. Saskatchewan’s farming communities saw most yields fall below their 10-year averages this year, as crops were hit by drought, heat stress, gophers, and grasshoppers. The economy is set to grow 0.6 per cent in 2023 and an additional 1.5 per cent in 2024.
The completion of the Coastal GasLink pipeline will give a boost to British Columbia’s mining industry over the next several years. Tourism in the province has continued to grow and a full recovery is expected by 2024, which is later than originally thought. Overall, the provincial economy is expected to growth by just 1.0 per cent in 2023 and a further 0.8 per cent in 2024.
Tourism continues to be a bright spot for Nova Scotia’s economy, which is still benefiting from the pent-up demand induced by the pandemic lockdowns. However, the strong domestic and global demand that helped propel the province’s economy last year and early 2023 has faded. The Conference Board of Canada anticipated GDP growth to be 0.5 per cent in 2023 and 0.8 per cent in 2024.
Over the next two years, Ontario will see the highest levels of population growth since the early 1970s which will help the economy avoid entering a steep downturn. High interest rates will continue to grip the housing market this year, as both residential construction investment and housing starts will fall for the second consecutive year in 2023. All in, The Conference Board of Canada forecasts the province’s GDP growth will be 0.8 per cent in 2023 before dropping to just 0.3 per cent in 2024.
Consumer spending has been a cornerstone of growth in Quebec’s economy over recent quarters, yet the rise in borrowing costs and fall in excess savings are increasingly weighing on household consumption. Demand for some of the province’s key exports is also subdued, as the economies of key trading partners have decelerated. The province’s economy is forecast to increase 0.1 per cent in 2023 and a further 0.1 per cent in 2024.
Although there are bright spots in the long term, Newfoundland and Labrador’s economy is expected to face another challenging year due to continued weakness in the oil and gas, fishing, agriculture, and manufacturing sectors. GDP for the province is anticipated to decline again in 2023 by 0.9 per cent before increasing 1.1 per cent in 2024, driven by a return in oil production capacity.
The Conference Board of Canada is the country’s leading independent research organization. Since 1954, The Conference Board of Canada has been providing research that supports evidence-based decision making to solve Canada’s toughest problems. Read more about our impact at the link here. Follow The Conference Board of Canada on Twitter
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