This is an excerpt from a full report by Robert Hogue, Senior Economist.
Provincial economies were shaped this year by many developments—expected and unexpected, domestic and international. Many of these developments are likely to have a significant impact in 2017 as well. Among them: Ottawa’s fiscal stimulus plan, the tightening of mortgage-insurance rules, the new 15% tax on foreign homebuyers in Metro Vancouver, Brexit, the election of Donald Trump, and OPEC’s announcement of oil-production cuts.
While uncertainty will continue to prevail, the economies of almost all Canadian provinces are set to expand in 2017. That includes a return to positive growth for Alberta and Saskatchewan, as energy revenues begin to recover and confidence starts to rebuild following two very difficult years in 2015 and 2016.
Ontario and Manitoba are tied for top spot in our growth rankings, though the forecasted rate—2.3%—isn’t exactly boom territory. Manitoba’s economy should get a boost from construction projects and broader strength in manufacturing, while for Ontario, 2.3% would mark a slight slowing in the pace of growth from 2016, reflecting moderating activity in its housing market.
British Columbia is giving up the top spot it held in 2016 as slowing home-resale activity cools what has been a powerful source of growth in the past few years. In Quebec, an easing of fiscal restraint should support a marginal acceleration. Weak but steady growth is likely to persist in most of Atlantic Canada, where demographic trends and dim capital investment prospects continue to pose challenges. The sole provincial economy likely to contract in 2017 is Newfoundland and Labrador, where a drop in capital investment and fiscal austerity are likely to prolong a provincial recession.
