Provincial business conditions point to continued growth: BMO
Drivers shift but national landscape balances out disappointing year.
TORONTO — Manufacturers looking for some good news about economic conditions are in luck: BMO sees Canada positioned for continued growth.
Seven Canadian provinces will balance the effects of a disappointing year in Alberta, Saskatchewan and Newfoundland & Labrador, according to forecasts from the 2016 BMO Blue Book.
The economic report published by BMO Capital Markets Economics and BMO Commercial Banking looks at each province’s business conditions. The prognosis? conditions are promising. Canada’s GDP will likely to rise 1.2% this year and accelerate to 2% in 2017.
It notes areas with more diverse resource bases have accelerated in spite of major cutbacks in the energy sector, especially those within agriculture, construction, innovation and tourism.
“While growth at the national level looks subdued but relatively undramatic, conditions at the provincial levels range from strong growth to outright recession,” said Robert Kavcic, senior economist, BMO Capital Markets. “Notable is the fact that regional economic growth drivers of the past decade have receded to the back of the pack, while past laggards move into a new leadership role.”
Here are some highlights:
• BC is projected to lead the pack again this year with 3% real GDP growth, more than twice national average.
• Real GDP in Alberta is expected to contract 2.3% this year, up from its 4% decline in 2015 though not expected to return to levels before the oil price shock in the near term.
• Saskatchewan’s economy will see a modest improvement of 0.5%, despite feeling the impact of the oil and gas sector.
• Manitoba, with the most diverse and consistent economy in Canada, should expand 2.4%, consistent with the average of the past five years.
• Ontario real GDP growth is expected to grow 2.6%, with a decrease to a 2.3% pace in 2017.
• Growth in Quebec is expected to pick up to 1.4%, supported by new-found fiscal stability and a warming labour market.
• Nova Scotia is poised to lead the region at 1.1% growth this year, as work is underway on a number of major capital projects.
• New Brunswick and PEI continue to face tough demographics, but the weak loonie is expected to provide a 0.5% and 1.0% boost, respectively.
Newfoundland & Labrador will likely see GDP contract 2.0% again this year as fiscal restraint remains heavy and some major investment projects reach completion.
Download the 2016 BMO Blue Book here.