Brighter days ahead for provincial economies: Conference Board
Newfoundland and Labrador, Alberta, and Manitoba expected to post strongest GDP growth in 2015
Oil & Gas
Conference Board of Canada
OTTAWA — Following another challenging economic year for many provinces, particularly in terms of job creation and business investment, the economic prospects of Canadian provinces look more positive for the months ahead and into next year, according to The Conference Board of Canada’s Provincial Outlook: Autumn 2014.
“We are finally seeing signs that lagging provincial economies are performing better and this momentum is expected to continue in 2015,” said Marie-Christine Bernard, associate director of provincial and territorial forecast.
“With Newfoundland and Labrador, Alberta, and Manitoba leading the way, most of the provinces are heading in the right direction, but attention to balancing provincial budgets will still be required.”
Nationally, real GDP growth is expected to accelerate to 2.6% in 2015, up from this year’s more modest increase of 2.2%. Stronger US economic activity, coupled with a slightly weaker Canadian dollar will keep export activity humming in 2015, the Conference Board said.
The outlook said Newfoundland and Labrador, Alberta, and Manitoba will be the best performing economies next year with an average real GDP growth of 3%.
After struggling through this year with steep job losses and lower oil production, the economic outlook is brighter for Newfoundland and Labrador. Following maintenance and technical difficulties which stifled operations this summer, the Terra Nova and North Amethyst fields are expected to fuel growth next year as they return to normal production. Increased oil production and stronger manufacturing output will help reverse a 1.3% decline in real GDP to growth of 3.4% in 2015.
In spite of weak global demand and geopolitical forces bringing down crude prices, Alberta’s economic forecast for the next two years remains positive. Having benefited from capital investment in the energy sector over the past decade, the dividend is now paying off with higher production and a stronger export outlook. The growing population, stronger job growth, and increased industrial production will propel the economy forward by 4.4% this year and an estimated 3.3% next year.
Manitoba is forecast to grow by 2.3% in 2014, accelerating to 3% in 2015, propelled by increased construction and metal mining. Business investment will be rising. At the same time, the provincial government will continue to invest heavily in infrastructure.
Prince Edward Island’s economy stood still this year due to a drop in business investment and a slow-down in employment affecting consumer spending. With both employment and household income expected to rise in 2015, real GDP is forecast to grow 2.3 per cent next year, which should enable the province to come within reach of achieving its goal of a budgetary surplus by 2015-16.
Nova Scotia is expected to post steady gains in the next two years. Strong growth among the goods-producing industries will help lift overall real GDP growth by 2.3% in 2015, after a similar gain of 2.2% this year. Increased natural gas production and robust gains in construction and manufacturing will generate better employment prospects over the near term.
New Brunswick’s economy is turning the page to better growth. A promising outlook for the forestry industry, increased potash production, and improving labour markets will be the key drivers of growth. Real GDP is forecast to grow 1.6% in 2015, accelerating from a gain of just 0.6% this year.
The Quebec economy will end 2014 with real GDP growth of 1.6%, a slightly better performance than the previous year. Ongoing export recovery will be a key contributor for a second year in a row. Exports of goods and services finally surpassed their 2007 peak in 2014, and are expected to post another robust increase next year, fuelled by the lower dollar and further improvements in the US economy. Overall, Quebec’s real GDP growth is expected to reach 2% in 2015.
Ontario’s domestic economy slowed to a crawl in the early part of this year, as construction was halted and consumers stayed indoors in the midst of a harsh winter. However, the economy quickly bounced back in the second quarter and real GDP will grow by 1.8% in 2014, buoyed by strong demand from a resurgent US economy and resilient Ontario consumers. Economic growth is expected to accelerate to 2.6% as business investment finally ends its two-year slump and posts solid growth in 2015.
In contrast to the robust growth of the early part of this decade, Saskatchewan’s economic growth is expected to reach just 1.5% this year. Gains in metal mining and potash production will help overall real GDP advance by 2.4% in 2015, although the forecast is muted by lower yields in the agriculture sector and more temperate gains in the oil industry.
Growth in BC is expected to improve in 2015, as a stronger US economy fuels exports and natural gas production increases a strong pace. Real GDP is expected to advance by 2.6%, after growing by 2.2% in 2014. Growth in metal mining production over the next five years will compensate for a struggling forestry industry.