Canada’s Top-Performing Provinces in TD Economics’ New Report

In the ever-evolving process of Canada’s provincial economies, TD Economics’ new report on top-performing provinces stands as a crucial guide. As we step into 2024, the economic outlook reveals shifts and challenges that demand our attention.

TD Economics recalibrates its 2023 and 2024 national forecasts following Canada’s unexpected downside growth in Q3 2023. The ripple effect is discernible in exports and consumption, with Quebec, Manitoba, BC, and Nova Scotia feeling the impact.

Provincial Perspectives

Despite the national adjustments, the relative growth rankings persist, foreseeing strong performances in the Prairies and a lag in BC, Quebec, and Newfoundland and Labrador. The fiscal updates depict provincial governments in a tougher financial position due to “higher-than-expected” expenses.

Best Performing Provincial Economies – A Deep Dive 

The report delves into individual provinces, offering insights into their economic landscapes.

British Columbia

• Despite a slight GDP setback of 0.3% to 0.9%, BC anticipates continued economic challenges in the coming year.
• The province faces repercussions from the Bank of Canada’s interest rate hikes, leading to a 25% decline in residential home sales since July 2023.
• Consumer caution is prevalent in the slowed provincial labor market, where job growth from January to November is a modest 1.5%, notably below the national average.
• TD economists acknowledge a relatively stable fiscal position for the BC government despite slight fiscal deterioration.

Alberta

• Alberta, while not immune to broader macroeconomic headwinds, remains insulated with supportive commodities, durable population gains, and relative housing affordability.
• Boasting one of the largest growth rates among provinces, Alberta forecasts real GDP growth of 2.2% in 2023 and 1.4% in 2024.
• Non-residential building construction sees significant investment despite higher borrowing costs, alongside a notable increase in residential building construction.

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Saskatchewan

• Falling slightly behind early-year expectations, Saskatchewan is predicted to exceed the national average in GDP gains in 2024 and 2025.
• Despite good job growth, struggles in key commodities like wheat and potash contribute to the province’s lagging performance.
• The real GDP growth for 2023, at 1.2%, is overshadowed by the previous year’s robust pace of 6.0%.

Manitoba

• Manitoba’s nearly 2% economic gain is deemed a letdown, considering the tepid recovery from the pandemic in 2022.
• Agricultural challenges, including canola production losses due to dry conditions, weigh on Manitoba’s economy.
• Despite tax relief, consumption growth is expected to soften over the next year due to elevated borrowing costs and the province’s fourth-highest household debt load in Canada.

Ontario

• Ontario, despite high household indebtedness and weak housing markets, exhibits resilience with a 1.5% year-on-year real GDP growth in the first half of 2023.
• The province’s growth likely outperforms the national average, attributed partly to increased motor vehicle exports.
• Ontario faces challenges with a nationwide GDP contraction in Q3, yet the province’s growth remains robust.

Quebec

• Quebec’s economy, experiencing weakness in construction and manufacturing, anticipates a slightly better growth performance in 2024 compared to 2023.
• Despite a 2% annualized contraction in real GDP in Q2, the labor market generates 50k net new jobs.
• Higher interest rates impact retail and services spending, contributing to weak consumption despite strong household savings and low debt.

New Brunswick

• New Brunswick maintains a positive economic outlook, with real GDP growth set to outperform Canada as a whole in the coming year.
• Low household debt enables consumers to avoid borrowing costs, supporting increased inflation-adjusted retail spending.
• The influx of permanent residents contributes to the ongoing job market momentum in the province.

Nova Scotia

• Nova Scotia’s booming population growth drives a roughly 1.5% economic increase, surpassing the 10-year average.
• Despite a fertile construction market, the province faces challenges with a 70% increase in average home prices since the pandemic, impacting sales.

Prince Edward Island (PEI)

• While no longer boasting the fastest population growth, PEI anticipates substantial growth, driven by immigration and interprovincial migration.
• Retaining immigrants contributes to PEI’s economic stability, fueling the fastest job growth in Canada.

Newfoundland and Labrador (NL)

• NL forecasts a second consecutive annual decline in real GDP for 2023.
• A recent agreement with Ottawa positions NL for significant economic opportunities, particularly in regulating renewable energy developments and offshore wind projects.

In summary, TD Economics’ provincial economic performance review shows the strong dynamics of Canada’s diverse provincial economic landscape. As each province navigates its unique challenges and opportunities, the report serves as a compass, guiding us through the complexities of the Canadian economic terrain in 2024. Stay tuned for more updates as we decode the future of Canada’s top-performing provincial economies.

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