Oil prices reverse economic fortunes of Canada’s largest cities
Calgary, Edmonton headed toward recession, while manufacturing drives growth in Halifax, Toronto and Vancouver.
OTTAWA — The collapse in oil prices has significantly altered the economic outlook among Canada’s largest cities, notably long -standing economic leaders in Calgary and Edmonton that are expected to fall into recession this year, according to The Conference Board of Canada’s Metropolitan Outlook: Spring 2015.
“Most other cities will see their economic fortunes improve this year, thanks largely to a weaker Canadian dollar and a stronger US economy,” said Alan Arcand, associate director of the Centre for Municipal Studies. “The slump in oil prices will take its toll on the economies of Calgary and Edmonton and to a lesser extent on Regina and Saskatoon.”
Toronto, Vancouver, and Halifax will be the fastest growing metropolitan economies in the country this year.
Declining oil prices will put Edmonton and Calgary in recession in 2015. Calgary’s economy is expected to shrink by 1.2% this year, while Edmonton’s real GDP is forecast to fall by 0.8%. The energy sectors in both cities will decline, but other sectors will also feel the pinch from lower oil prices, including construction, transportation and warehousing, and wholesale and retail trade. But with oil prices expected to recover somewhat next year, modest economic growth is anticipated for both cities next year. Specifically, Calgary’s real GDP is forecast to rise by 1.5% and an expansion of 1.3% is projected for Edmonton in 2016.
Toronto is expected to expand by 3.1% in 2015, making it one of the fastest growing metropolitan economies in the country this year. The CMA’s manufacturing and transportation and warehousing sectors will benefit from stronger US demand and a weaker loonie. Toronto can also expect a boost in tourism activity when the region hosts the Pan Am/Parapan Am Games this summer.
Widespread gains across all sectors of Vancouver’s economy will lead to growth of 3.1% this year. The manufacturing sector will be kept busy by work on new non-combat vessels, while construction activity is set to increase thanks to an upward trend in housing starts and a healthy non-residential sector. At the same time, continued gains in employment should keep consumers spending.
Halifax joins Toronto and Vancouver, as one of the economic growth leaders this year, with real GDP growth of 3.1%. The local manufacturing sector is expected to see a big increase in output this year, as production begins at the Halifax Shipyard on the first set of new vessels for the Royal Canadian Navy.
Hamilton’s manufacturing sector will also benefit from a stronger US economy and weaker Canadian dollar, so its recovery is expected to continue this year. The Pan Am/Parapan Am Games will also boost growth in the city’s tourist-oriented industries, forecast to expand by 2.7% in 2015.
Real GDP growth in Montreal will reach 2.6% in 2015. The construction sector is expected to be a growth leader, thanks to major infrastructure projects, such as the Champlain Bridge replacement.
Winnipeg’s economy is expected to grow by 2.5% in 2015, as services growth stays healthy and non-residential construction picks up. This should help fuel employment increase of 2.2% in Winnipeg, the biggest gain since 2010.
Québec City’s real GDP growth is forecast to hit a five-year high of 2.4% in 2015, thanks to the ongoing recovery in manufacturing and stronger services growth.
Driven by a turnaround in the public sector and strong manufacturing, Victoria’s real GDP is forecast to rise by 2.1% in 2015, the first time since 2007 that growth will surpass 2%.
Prompted by the decline in oil prices, Regina’s economic growth will slow to 1.9% this year, down from 5% in 2014. Employment increases will remain below 1% for the second straight year in 2015, and this will boost the unemployment rate to a five-year high of 4.7%.
Following gains exceeding 6% in five of the past six years, Saskatoon’s economic growth is forecast to slow to a post-recession low of 1.8% in 2015. The slowdown will be led by a dramatic cooling in Saskatoon’s resources, agriculture and utilities industry, due to lower oil prices.