After their recent surprising display of resilience, most provincial economies are poised to grind to an essential stand-still this year. A few provinces (Alberta, Saskatchewan and PEI) are expected to record somewhat healthier gains of around 1.5-2 per cent on average this year, says the new Provincial Economic Forecast by TD Economics.
“Several factors have added to durability in spending in recent months. These include ongoing strength in job markets – especially in Alberta and the Atlantic – a trove of post-pandemic excess household savings built up across economies and growing financial supports to households from governments in the form of daycare subsidies and inflation-relief measures, said the report.
“These influences have likely delayed but not extinguished the hit to spending and hiring flowing from the steep interest rate hikes implemented over the past year. Going forward, we expect the dampening effects to become more visible. Households in B.C., Ontario and Alberta are likely to show more outsized sensitivity to high borrowing rates, given their status as the most indebted in Canada, whereas those in Quebec in the Atlantic will likely be less strained.”
The report said some improvement in recent data suggests that Canadian home sales may soon find their bottom. It’s notable that this bottom could be driven by Ontario and B.C. as activity begins to climb back in these two markets. Growth in Canadian average home prices, meanwhile, is likely to lag sales, as markets remain looser than historical averages in B.C. and Ontario, it said.
“Upward growth revisions in China, the EU and the U.S. suggest a stronger external environment than what we thought in December. This more favourable backdrop should benefit exporters in all provinces. Oil prices should also climb given improving Chinese demand, boosting prospects in Alberta, Saskatchewan and Newfoundland and Labrador.”
The full report on each of the provinces can be found here.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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