Very few provinces will be exempt from the growth-dampening effects of high interestrates, lofty inflation, and global economic uncertainty. DesjardinsGroup | realestate Canada economy
, authored by principal economists Marc Desormeaux and Hélène Bégin, examined a range of factors working for and against the economic recovery of each Canadian province in the year ahead. It states that, as the housing correction moves into its next phase, Ontario, BC, and the Maritime provinces will be “particularly exposed” to secondary effects. As such, these regions are expected to post slower growth in 2023.
“Still, Ontario carries momentum into 2023,” write Desjardins economists, pointing to the province’s “stronger-than-anticipated” real GDP in Q3 2022, which was attributed to non-residential business investment and exports. For BC, economists paint a more dismal picture, calling the province “Canada’s most housing-exposed.” As such, economic weakness is expected to emerge increasingly throughout 2023.
Conversely, regions reliant on commodity production, such as Alberta, Saskatchewan, and Newfoundland and Labrador, stand the best chances of swift recovery in 2023. This is in spite of commodity prices softening on par with the weaker global economy, which will surely dampen industry profitability and economic activity, but won’t negate it completely.will also bode well for Alberta’s economy in 2023, says Desjardins.
Despite no shortage of market pessimism, Desjardins reports that recent fiscal updates have “almost unequivocally” projected better-than-anticipated bottom lines. “This leaves many provinces with more room to offer support in the event of an economic downturn while also staying true to long-run fiscal sustainability objectives.”“We still have not seen the effects of inflation on the expenditure side of the ledger, notably in higher public sector wages,” the report reads.
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