Newfoundland and Labrador to have strongest economic growth in Canada
Staff Writer |
Thanks to higher offshore oil production, Newfoundland and Labrador will go from having the weakest provincial economy this year to the front of the pack in 2019, according to The Conference Board of Canada's Provincial Outlook: Autumn 2018.
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Most provinces, however, can expect weaker economic growth of below 2 percent next year.
Newfoundland and Labrador is forecast to lead the country in economic growth next year. Operations at the Hebron offshore platform and a resumption of activity at the Hibernia platform at more normal levels will fuel real GDP growth of 5.2 percent in 2019—a strong turnaround from the decline of 0.4 percent in 2018.
Also experiencing above-average growth is Prince Edward Island, as it benefits from a strong domestic economy, robust population gains, and consumer demand growth that will help to keep real GDP growth at 2.7 percent in 2019.
The economic outlook for the rest of the Atlantic region, however, is more temperate. The end of natural gas production in Nova Scotia is weighing on economic growth and the province is forecast to eke out gains of just 0.9 percent this year and 1.0 percent in 2019.
Neighbouring New Brunswick, which is facing similar challenges as its population ages and the baby boomers retire from the workforce, is forecast to experience slightly better economic growth of 1.3 percent in 2019, up from just 0.6 percent in 2018.
In Central Canada, the Quebec and Ontario economies have been slowing but are still performing well. Quebec's recent economic strength is easing.
After growing by close to 3 percent in 2017–18, economic growth will dip to 1.8 percent in 2019 as consumer demand is held back by interest rate increases and more moderate job creation.
Ontario's economy has been heading in the same direction, as a weaker housing market and more cautious consumer spending hold real GDP growth to 2.2 percent in 2018 and 1.9 percent in 2019–20. The recent announcement by GM that it plans to close its Oshawa plant presents a downside risk to the Ontario forecast. This could shave as much as 0.2 to 0.3 percentage points from growth in 2020.
Manitoba's economic growth will be weighed down by a few key factors, such as dwindling mineral production and weaker investment as Manitoba Hydro's major construction projects wind down. This will mean overall real GDP growth of 1.9 percent in 2018 and in 2019, but just 0.9 percent in 2020.
Economic prospects are also modest for Saskatchewan. The province's economy is forecast to gain just 1.6 percent in 2019. Still, that is an improvement over the 0.5 percent growth expected in 2018. Healthy job creation has remained elusive in the province, and the jobless rate is still elevated two years after the recession ended.
With the continued recovery in Alberta's domestic economy and more oil moving by rail, Alberta's real GDP is set to grow by 2.6 percent in 2018 and 2.2 percent in 2019. However, challenges remain for the energy sector and this poses a downside risk to the outlook and economic growth in 2019 could be lower. The combination of a lack of adequate pipeline transportation capacity and maintenance at U.S. refineries that process non-conventional oil from Alberta is casting a shadow over the long-term prospects for the sector. Most recently, the weakness in the West Texas Intermediate crude oil price and the provincially mandated reduction in oil production to alleviate the supply glut are also adding to the uncertainty.
The economic outlook for British Columbia is brighter, as LNG's Canada project for a terminal in Kitimat is moving ahead. This will help boost British Columbia's economic growth from 2.1 percent in 2018 to 2.7 percent in 2019. The project will be built from 2019 to 2023 and will include construction of the $6.2-billion pipeline. It will also lead to increased investment in drilling activity. ■