While the declining interest rate environment is easing borrowing concerns, additional rate cuts will be required to significantly impact consumer and business spending decisions, according to new research from The Conference Board of Canada. Canada’s economy is forecast to expand by just 1.0 per cent in 2024, before rebounding to 2.1 per cent growth in 2025.

“A weak handoff from 2023 is hampering growth prospects, but provincial economies should expect a gradual recovery in the second half of this year,” said Richard Forbes, Lead Economist at The Conference Board of Canada. “As strong population growth continues to boost household spending and overall spending conditions improve, a better performance is in store for 2025. However, that is presuming U.S. policy doesn’t present too many shocks to Canada.”

This year, Newfoundland and Labrador is poised to lead provincial growth in Canada due to the renewed operations of the Terra Nova Offshore oil platform. Still, population dynamics will constrain growth prospects throughout the remainder of the forecast period. GDP growth is forecast to be 1.8 per cent in 2024 and 2.1 per cent in 2025.

Several factors are driving steady growth in Nova Scotia, including healthy population gains, a positive exports outlook, and strong public infrastructure spending. Employment gains are also expected to remain relatively strong this year, but growth will ease in the coming years. The province’s GDP is projected to increase 1.4 per cent in 2024, before rising 1.8 per cent in 2025.

Despite moderating employment growth, Alberta’s labour market prospects over the medium-term continue to be strong. While modest GDP growth is projected for this year, the economy is expected to gain momentum moving forward, as positive conditions for population and income growth persist through to 2028. Alberta’s GDP is forecast to rise 1.3 per cent in 2024 and a further 2.4 per cent in 2025.

While the completion of several major energy projects are cooling business investment in British Columbia, the region is experiencing significant growth in international exports. The economy is forecast to expand by only 1.2 per cent in 2024 followed by a 2.1 per cent gain in 2025.

Slowing population growth is expected to dampen Prince Edward Island’s economy. Housing starts are projected to pick up in 2024 before declining slightly in 2025, while non-residential investment is projected to remain weak throughout 2025. The province’s GDP growth is forecast to be 1.2 per cent in 2024 followed by 2.2 per cent in 2025.

New Brunswick’s building activity will outperform most other provinces in 2024. Still, easing population growth coupled with overall weak investment spending is expected to soften the provincial economy. Real GDP growth is projected to slow to 1.1 per cent in 2024, before strengthening to 1.9 per cent in 2025.

Reduced immigration inflows will ease housing pressures in Ontario but will also temper the province’s economic growth prospects. Additionally, although Ontario’s investment outlook is being propped up by substantial investments in its automative sector, it is not guaranteed to yield net economic gains. GDP growth is expected to decelerate to 1.0 per cent this year before rebounding to 2.1 per cent growth in 2025.

Despite sluggish activity this year, Manitoba’s non-residential business investment is expected to rebound in 2025, showing some of the strongest gains among the provinces. Manitoba’s economy is expected to expand by 1.0 per cent in 2024, before accelerating to 2.5 per cent growth in 2025.

An aging workforce and slow immigration gains are impacting Quebec’s labour force growth and limiting the province’s overall potential. While Quebec’s investment outlook is more positive, GDP is expected to rise just 0.8 per cent in 2024. The economy will recover to 1.6 per cent growth in 2025.

Saskatchewan’s rocky start to 2024 will hamper growth prospects for the year. However, performance will improve in the later years of the forecast, driven by Saskatchewan’s fundamentals in uranium mining and Jansen’s $14 billion potash project. Real GDP is forecast to increase by 0.6 per cent this year, followed by a stronger 2.6 per cent gain in 2025.

About The Conference Board of Canada

The Conference Board of Canada is the country’s leading independent research organization. Since 1954, The Conference Board of Canada has been providing research that supports evidence-based decision making to solve Canada’s toughest problems.