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RBC Economic Outlook - Provincial Fact Sheet

 

Highlights from across Canada

 

March 11, 2016  


British Columbia: Housing to remain top of mind in 2016
A scorching housing market, competitively priced exports and a healthy labour market are all factors which are expected to keep British Columbia at the top of provincial growth rankings in 2016. RBC’s forecast calls for real GDP to grow at a rate of 2.9 per cent in 2016 and 2.7 per cent in 2017, both little changed from the rate of 2.8 per cent estimated for 2015.

“We’re keeping a close eye on the risk of an overheated housing market in Vancouver,” said Craig Wright, senior vice-president and chief economist, RBC. “However, we believe the likelihood of a crash in the near term is low given the strong momentum at the present time, solid gains in B.C.’s labour market and potential for an uptick in newcomers to the province.”

Learn more about RBC’s Economic Outlook for British Columbia here.

Alberta: Another year of contraction
Persistently low oil prices and downgraded prospects for a turnaround in the energy sector have led RBC to revise its economic outlook for Alberta. RBC now expects economic activity to contract for a second consecutive year in 2016 as weakness directly related to the downturn in the energy sector continues and increasingly spills over to other sectors.

“Last year, strong public sector hiring helped offset private sector layoffs, but as firms grapple with stubbornly weak oil prices, additional layoffs are likely to drive overall employment even lower in Alberta in 2016,” said Craig Wright, senior vice-president and chief economist, RBC. “Alberta’s weakening labour market was further evident with the number of claimants for employment insurance rising to the highest levels we’ve seen since 2009.”

Learn more about RBC’s Economic Outlook for Alberta here.

Saskatchewan: Economy to remain soft
RBC’s growth expectations for Saskatchewan’s economy have lowered significantly to 1.2 per cent, down from the 2.5 per cent projected last December. Alongside Alberta, Newfoundland and Labrador, Saskatchewan remains one of the three provinces most negatively affected by the drop in oil prices. In addition to extended oil woes, weak GDP growth in the province in 2016 can also be attributed to an expected softening in potash production.

“The decline we’ve seen in Saskatchewan’s potash production over the past few months is expected to persist through the first half of 2016,” said Craig Wright, senior vice-president and chief economist, RBC. “However, we’re expecting increased demand for potash from a number of key markets later in the year which would limit the overall annual decline.”

Learn more about RBC’s Economic Outlook for Saskatchewan here.

Manitoba: Province to outpace national growth
Manitoba’s economy is on pace to grow by 2.2 per cent this year. Though the increase in 2016 represents a modest pace of growth, it is above the national average of 1.7 per cent. A strengthening trend in Manitoba’s export sector and tentative signs of growth in manufacturing indicates many industries are well positioned to benefit from continued above-average US growth and weak Canadian dollar. We believe that these factors will contribute to growth in the province remaining above the national average both this year and in 2017.

“The impact of sliding oil prices in Manitoba has been indirectly felt by those industries supplying the energy sector in neighbouring Saskatchewan and Alberta,” said Craig Wright, senior vice-president and chief economist, RBC. “We’re forecasting that strong foreign demand will increasingly offset this energy-related weakness, setting the stage for modest growth in manufacturing in the year ahead.”

Learn more about RBC’s Economic Outlook for Manitoba here.

Ontario: Maintaining cruising speed
Ontario’s economy is expected to remain near the top of the provincial growth rating in 2016. Ontario exporters are expected to benefit from the low Canadian dollar and fairly strong demand from private and public sectors, which will support overall economic growth. RBC expects that Ontario’s economy will grow at a rate of 2.3 per cent this year, slightly weaker than the estimated rate of 2.5 per cent in 2015, and forecasts a pick-up to 2.6 per cent in 2017.

“While we made slight downgrades to our growth estimates for most provinces in 2015, Ontario was an exception where we boosted our estimate in light of stronger than expected indicators,” said Craig Wright, senior vice-president and chief economist, RBC. “We believe that low interest rates, a confident household sector, growing business investment and increased public infrastructure building will continue to stimulate activity in the province in 2016.”

Learn more about RBC’s Economic Outlook for Ontario here.

Quebec: Bumpy transition to stable growth in 2016
Despite a bumpy entrance into 2016, Quebec’s economy is expected to pick up its pace moderately this year. Some of the factors that delayed growth in 2015 – including weak business investment – are not expected to be as restrictive in 2016. Various sectors such as exports are expected to have a greater positive impact on overall performance, in large part due to the low Canadian dollar and strong U.S. and Ontario markets. While RBC downgraded its projection for Quebec’s annual real GDP growth to 1.0 per cent in 2015 from 1.3 per cent previously forecasted, it still expects re-acceleration to a rate of 1.4 per cent in 2016 and 1.8 per cent in 2017.

“Although Quebec’s economy had a disappointing finish to 2015, we believe that the elements will be in place for growth to pick up slightly in 2016,” said Craig Wright, senior vice-president and chief economist, RBC. “Among other things, we consider the degree of weakness in business non-residential investment as overdone and that 2016 should see firms beginning to boost their spending in the province as they run against capacity constraints. And, the resumption of job creation in the province, especially of full-time positions, bodes well for continued support for household spending.”

Learn more about RBC’s Economic Outlook for Quebec here.

Atlantic Canada:

New Brunswick: Stuck in the slow lane
New Brunswick is expected to be among the slower-growing provincial economies in 2016 and RBC forecasts a downgrade in New Brunswick’s real GDP growth from an expected growth rate of 1.0 per cent in 2015 to 0.4 per cent in 2016 and 0.6 per cent in 2017.

“New Brunswick’s lacklustre economic performance and absence of growth drivers lead us to rank it among the slower-growing provincial economies in 2016,” said Craig Wright, senior vice-president and chief economist, RBC. “While we expect that exports will be a key growth driver in New Brunswick, weak demographics, a tough provincial budget, declining investment spending and job losses continue to present challenges for the economy.”

Learn more about RBC’s Economic Outlook for New Brunswick here.

Nova Scotia: Modest growth carries on
Nova Scotia’s economy is expected to benefit from increasing external demand in 2016, mainly from the U.S., and shipbuilding and construction activity in Halifax. These factors will offset the continued decline in natural gas production and indications of weak employment growth which will restrain consumer spending. RBC projects real GDP growth to accelerate to 1.3 per cent in 2016 before decreasing slightly to 1.1 per cent in 2017.

“Shipbuilding and the high demand for exports are expected to deliver a boost to the manufacturing sector and balance challenging economic conditions elsewhere in the province,” said Craig Wright, senior vice-president and chief economist, RBC. “Exploration and drilling activity for new gas deposits continues offshore, creating potential for the oil and gas industry in the longer term.”

Learn more about RBC’s Economic Outlook for Nova Scotia here.

Prince Edward Island: Exports to sustain stable growth
Prince Edward Island is estimated to have had the strongest GDP growth in Atlantic Canada in 2015 and will continue to thrive on exports which remain a large contributor to overall economic growth and stability. The low Canadian dollar supports this trend and a robust hand-off from 2015 suggests further growth in exports this year. RBC projects real GDP to grow by 1.2 per cent in 2016 before moderating to 0.9 per cent in 2017.

“Despite having the strongest estimated GDP growth in Atlantic Canada in 2015, employment continues to grind lower in PEI,” said Craig Wright, senior vice-president and chief economist, RBC. “While manufacturing continues to be a bright spot for job creation, weaknesses in other sectors are expected to push overall employment growth negative again in 2016.”

Learn more about RBC’s Economic Outlook for Prince Edward Island here.

Newfoundland and Labrador: A sobering outlook for the years ahead
Oil production in Newfoundland and Labrador is poised to be relatively stable this year, but low oil prices are expected to continue to affect incomes across household, corporate and government sectors. RBC forecasts a decline in GDP by 3.5 per cent in 2015, a further reduction by 0.1 per cent in 2016 and a continued drop by 0.8 per cent in 2017.

“Declining oil prices and production took a severe toll on Newfoundland and Labrador’s overall growth in 2015. While oil production is expected to stabilize in 2016, low oil prices and reduced investment spending will continue to affect growth prospects,” said Craig Wright, senior vice-president and chief economist, RBC. “In addition, weakness stemming from low oil prices will hit the provincial economy at the same time that major construction projects are wrapping up.”

Learn more about RBC’s Economic Outlook for Newfoundland and Labrador here.


For more information, please contact:
Craig Wright, Senior Vice-President and Chief Economist, RBC Economics Research, 416-974-7457
Robert Hogue, Senior Economist, RBC Economics Research, 416-974-6192
Catherine Hudon, RBC Communications, 416-974-5506