Provincial economies are steady but coronavirus will have an impact

Canada’s provincial economies are holding up well but there will be an impact from the Covid-19 coronavirus the Conference Board of Canada said Thursday.

There is no way to clearly determine what that impact will be but it is likely to include a hit to tourism with Chinese visitors to Canada typically spending around $1.8 billion annually and this likely to be slashed by a third.

“Over the near team, we expect growth in the Canadian economy to remain steady,” says Matthew Stewart, Director, Economic Forecasting at The Conference Board of Canada. “However, one of the emerging risks to the economic outlook is COVID-19 (novel coronavirus) and the impact it will have on global economic growth. At this stage it is still difficult to estimate the magnitude of the outbreak, but there’s little doubt that Canada’s economy will be impacted.”

The outlook calls for growth in the Canadian economy of 1.8% this year and 1.9% in 2021 as energy investment recovers and solid disposable income growth supports household spending.

Provincial outlook:

• Newfoundland and Labrador’s economy is set to expand at a steady pace over the medium term after several years of uneven growth. Overall, we expect the GDP to average annual growth of 1% over this year and next.
• Prince Edward Island is set to lead the pack again. The recent economic hot streak for Prince Edward Island is showing few signs of slowing. Strong population growth thanks to an influx of international immigrants, combined with one of the lowest vacancy rates in the country, is leading to surging housing demand on the Island.
• Nova Scotia’s economic growth will ease to 1.2% in 2020, due mainly to the closure of the Northern Pulp Mill and declines in residential investment. Population growth is set to slow, dampening demand for new housing and leading to a decline in residential investment throughout the forecast.
• New Brunswick’s economy performed well in 2019, growing by 1.4%. And we forecast an even better year in 2020, with growth nudging up to 1.5%. The province has suffered through a string of bad news in recent years, including the explosion at the Irving refinery in 2018, the closures of the Belledune smelter and the Baker Brook sawmill at the end of 2019, and fires at two different lobster processing plants. But New Brunswickers can look forward to better economic prospects going forward.
• Quebec’s economy has enjoyed a strong run over the past few years, with the province reaping the benefits of high levels of consumer confidence, healthy population growth, and strong levels of business investment. These factors have helped economic growth surpass 2.0% every year since 2017, with annual gains averaging 2.6%.
• Ontario’s real GDP is forecast to rise 1.8% in both 2020 and 2021. That is roughly in line with the province’s growth in 2019, but well below the 2.4% average between 2014 and 2018. Several factors are contributing to our outlook for slower growth ahead. Moderating wage and employment gains will weigh on household disposable income and limit the potential upside of household consumption. In addition, more stringent government spending means that the public sector’s contribution to the province’s economy will be more subdued than in recent years.
• Manitoba’s economy is forecast to grow by 1.0% in 2020—roughly in line with last year’s 0.9% pace. The completion of major projects in the province will weigh on business spending this year and next. Fortunately, residential investment in set to pick up over the near term, as population growth remains strong and housing starts have fallen well below household formation in recent years. We expect economic growth to pick up in 2021 to 2.0%.
• Saskatchewan’s economy ended 2019 on a sour note. Employment declined in the fourth quarter, retail sales fell over the second half of last year, and the province’s potash sector was hit by one closure after another.
• Alberta is set to an uneven recovery. The province’s economy will get back on track in 2020 after a mild recession this past year. Difficult operating conditions in the energy sector led many oil and gas companies to slash their 2019 spending plans, deleverage debt, and focus on shoring up their financial positions.
• British Columbia’s economy will continue to post strong growth in 2020. Real GDP in the province is expected to expand 3.1% this year, which will keep B.C. among the top three provinces in terms of economic growth for the seventh year in a row.