Despite the looming global recession, the Conference Board of Canada (CBoC) pegs Alberta and Saskatchewan as leading Canada in real GDP growth, with Manitoba also rising. However, CBoC forecasting director Ted Mallett anticipates increasing interest will push most provinces to near zero economic growth.
“Rising interest rates are applying pressure across the country, but other more specific factors affect provincial outlooks unevenly,” said Mallett. “Although the country as a whole is in for a few quarters of effectively zero growth, prospects for the provinces vary considerably — broadly in keeping with our previous forecasts.”
According to a CBoC report examining economic performance for the end of 2022 and through 2024, strength in the resources sector, which propelled the Alberta and Saskatchewan economies in 2022, will carry over into 2023. Manitoba will also fare above the national average.
In 2022, Saskatchewan's real GDP growth should reach 6.8%, driven by potash, uranium, and increased crop production. Because of the war in Ukraine, a global effort to reorganize the potash and uranium markets will give Saskatchewan the luxury of increased demand in the coming years. As a result, the CBoC expects Saskatchewan's GDP growth to expand by 3.6% in 2023 and 2.6% in 2024.
In the second quarter, Alberta's oil and gas sector production rebounded and increased drilling activity giving the sector positive growth in the latter half of the year. The province's $12.3 billion surplus came from the sector's rebound and high energy prices. However, the industry has begun to cool down. In 2022, Alberta's GDP is expected to increase by 4.7%, with another 2.8% in 2023 and 2.7% in 2024.
Though Manitoba had a challenging 2021, it rebounded with 3.7% growth in 2022 as crop production recovered. However, rising interest rates will inhibit the province's growth to 1.8% in 2023 and 2.4% in 2024 — slower than their prairie counterparts.
Most other provinces in the federation, on the other hand, face financial turmoil in the coming years.
The Ontario and B.C. economies will be constrained by rising interest rates well into 2023 but are poised to recover well in 2024.
Economic growth will also ease in Quebec next year; demographic constraints will further weigh on the economy in later years.
The Maritimes will be hampered by the consumer side of their economies and demographic challenges.