This year will be a story of slowing growth across the country, but not all slowdowns are created equal, and Canada’s provinces will exemplify that, according to the latest Provincial Forecast by CIBC Economics.
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“Rather than being about which province comes out on top, however, it will more be about which provinces look the least bad. Debt-burdened households in Ontario and BC, where a large share of activity is tied to the housing market, will see the slowest growth, along with Quebec,” said the report.
“Activity in Quebec will be limited by generally weaker population growth than other provinces and entering the year on softer footing given strikes in the public sector. The Atlantic provinces will look less bad, where population growth has been robust. And towards the end of the year, commodity-producing provinces should receive a lift from signs of stronger commodity prices and a recovery in demand as interest rates are expected to be falling globally.
“Searching for momentum Our provincial GDP forecasts have most economies avoiding an outright recession, but provinces will look worse off in percapita terms. CIBC’s provincial momentum indicator tracks changes in nine monthly indicators relative to historical norms and on a per-capita basis to provide a sense of how much activity is running above or below its typical pace. It’s clear that 2023 was a bleak year for economic prospects across the country, as activity moved from being above trend at the end of 2022 for most provinces, to operating well below trend by the second half of 2023.
“Quebec has been hit with a particularly sharp deceleration, with the economy recording two consecutive negative quarters of GDP in 2023, suggesting that it entered recessionary territory, although that masked a climb in domestic demand in Q3. Some of the hit to activity in the Prairies was tied to one-off dents from droughts and wildfires, which impacted exports, and although that leaves room for some recovery in 2024 if those aren’t repeated, the deterioration in global demand will be a limiting factor. The cooling seen in BC and Ontario owes largely to constrained housing market activity and the impact of mortgage renewals on consumption, with an added negative for Ontario coming from the supply chain impacts tied to the auto sector strike in the US, and weakness in BC compounded by the port strike. It’s not all doom and gloom, however, as the lows reached in 2023 for the momentum indicator are less negative than those seen during the 2008/09.”
The report said the Canadian economy is forecast to fall from an estimated 1.1% in 2023 to 0.6 in 2024 and then rise to 1.8% in 2025.
Mario Toneguzzi
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 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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