Atlantic and Prairies expected to lead
TD Economics has updated its growth forecasts for Canada in 2024, indicating a nationwide uptick in economic prospects driven by increased capital spending and stronger growth in the United States. However, the forecast suggests that most provinces will still experience growth rates below their long-term trends.
The Atlantic provinces and the Prairies are expected to lead in growth, while Ontario, British Columbia, and Quebec may see more modest increases.
As the 2024 budget season progresses, with Ontario being the only major province yet to present its fiscal plan, it's clear that increased government spending and tax relief measures are set to bolster economic growth in British Columbia, Quebec, and Nova Scotia. However, these measures will lead to deficits estimated between 1-2% of GDP for the year. Alberta stands out as an exception, expecting to report surpluses in the coming years.
The Canadian housing market is showing signs of strength in the first quarter of 2024, especially in British Columbia and Ontario, which are contributing significantly to this positive shift. TD Economics now anticipates positive price growth across nearly all provinces, with notable increases expected in Alberta and the Atlantic region.
Read next: What are economists saying about Canada's inflation surprise?
Population growth is projected to remain robust, driven by high targets for permanent immigration. However, the influx of non-permanent residents is expected to decline towards the year's end, influenced by federal measures such as the cap on international study visas. This policy is poised to impact provinces like Ontario, British Columbia, Nova Scotia, and New Brunswick the most.
Commodity-producing provinces are predicted to fare well against economic challenges, with crude oil prices stabilizing around $80 a barrel due to a balance of supply and demand factors. This stability supports the expectation that oil and other commodity prices will continue to exceed their long-term averages, benefiting provinces with commodity-based economies.
Finally, unemployment rates are forecasted to rise across Canada, with Alberta and the Atlantic provinces potentially performing better due to their ability to sustain employment growth in line with labour force expansions. In contrast, Ontario, Quebec, and British Columbia may experience a sharper hiring slowdown.
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