Provincial economies are performing broadly as expected. Activity is likely to remain subpar across most of Canada, as regional economies continue to absorb the impact of elevated rates, according to a report by TD Economics.
“We still see scope for growth outperformances in the Atlantic Region and Prairies, with somewhat weaker expansions likely in Ontario, B.C and Quebec,” it said.
James Wheeler
“The Bank of Canada has begun to normalize its policy rate. However, the process will be gradual, with more significant progress in 2025. By late this year, the U.S. central bank should also be trimming its policy rate, downwardly pressuring Canadian yields and setting the stage for meaningful rate relief. All provinces will benefit, particularly those with the most highly indebted households such as Ontario, B.C., and Alberta.
“Falling borrowing costs will also deliver a shot in the arm to Canadian housing markets later in the year, changing the momentum from a spring market that has been subdued. Home sales growth should be particularly sturdy in B.C. and Ontario given pent-up demand, although affordability pressures will limit price gains. In contrast, markets in the Prairies should continue to outperform.”
The report said population growth across the nation continued to balloon over the first quarter of 2024, notably in Alberta, Ontario, and PEI. This may be the last surge before we see population growth rates slowly taper as a result of recently announced policies by the federal government. For now, decent employment gains have not been able to keep pace with the quickly growing labour force, leading to higher unemployment rates across most jurisdictions. We see jobless rates generally peaking by the end of this year before gently pulling back in 2025.
“Commodity provinces are still best positioned to navigate growth headwinds over the remainder of the year. We see oil prices averaging a fundamentally supported $80/bbl for 2024, slightly higher than forecasts laid out in provincial budgets. Most other commodity prices should also remain above their-long-term averages, providing a solid floor for activity in commodity-oriented provinces,” added TD.
“The Trans Mountain Pipeline completion will bolster oil production and export activity, providing an economic boost to Alberta and B.C. Meanwhile, provincial governments will play a part in the near-term expansion with high levels of spending cemented from recent budgets. In this vein, the public sector hiring has propped up overall job creation in the economy, especially in the Atlantic provinces and B.C. ”
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. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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