Pressure is Easing on Provincial Economies

OTTAWA, Ontario, Nov. 26, 2024 (GLOBE NEWSWIRE) — With inflationary pressures easing and the Bank of Canada’s cutting cycle firmly underway, strengthening capital investment and consumer spending are supporting a brighter outlook for Canada in 2025, according to new research from The Conference Board of Canada. The Canadian economy is forecast to expand by 1.1 per cent in 2024, before growing a further 1.7 per cent in 2025 and 2.2 per cent in 2026.

“The economy is set to face fewer economic headwinds in the coming year, paving the way for a stronger performance in 2025,” said Richard Forbes, Lead Economist at The Conference Board of Canada. “However, challenges persist. A steep decline in international migration over the next few years will slow population growth, tighten labour markets, and hamper demand for goods and services.”

Newfoundland and Labrador is leading provincial growth in Canada, spurred by the renewed operations of the Terra Nova Offshore oil platform and healthy population gains. However, momentum is expected to slow in 2025 as government spending takes a hit. GDP growth is forecast to be 2.0 per cent in 2025 and a further 1.7 per cent in 2026.

The completion of several major projects, coupled with a weaker outlook for international migration, are both factors that are weighing on British Columbia’s growth prospects. The economy is projected to expand by 1.7 per cent in 2025 and 2.2 per cent in 2026.

Following this year’s steady growth, Nova Scotia’s economy is expected to gradually strengthen in 2025, supported by rising consumer demand that will boost auto parts and food products shipments. The province’s GDP is projected to increase by 1.6 per cent in 2025 and 2.0 per cent in 2026.

The ongoing development of the CentrePort Canada Rail Park, which is strategically enhancing Manitoba’s position as a shipping hub for western Canadian manufacturing, will provide a boost for the province’s economy. GDP is expected to grow by 2.2 per cent in 2025, followed by 2.3 per cent in 2026.

A lack of any major current capital projects is dragging on New Brunswick’s medium-term prospects. Coupled with limited population gains, the province’s growth will remain moderate in 2025. The economy is projected to expand by 1.5 per cent in 2025 before accelerating an additional 1.8 per cent in 2026.

Slowing population growth will weigh on Prince Edward Island’s economy. Residential construction is expected to moderate next year, following a record year in home building. GDP is forecast to grow by 2.0 per cent in 2025, before picking up a further 2.2 per cent in 2026.

Substantial investments in the auto sector will drive renewed growth in Ontario’s manufacturing sector, underpinning a stronger economic performance in the year ahead. Weaker population gains will ease housing cost growth and lead to a tighter labour market. Ontario’s GDP growth will pick up to 1.8 per cent in 2025, before increasing to 2.4 per cent in 2026.

Weak business investment and low migration targets are weighing on Quebec’s economy, which is projected to grow by just 1.0 per cent in 2025. The province’s economy will also be challenged by weakening consumption growth, which will limit GDP growth to 2.0 per cent in 2026.

After subdued growth in 2024, Saskatchewan’s performance is expected to strengthen through the forecast, supported by potash and uranium mining. In the upcoming year, Saskatchewan is also poised to see some of the strongest residential investment growth among provinces. The economy is projected to expand by 2.8 per cent in 2025 and 2.2 per cent in 2026.

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