Jacques Marcil, a senior economist with TD Economics, said the economic futures of Canadian provinces this year may largely depend on their connections to Europe and exposure to the strong possibility of a European recession.
Specifically, the report adjusts a September forecast to show slower growth this year in Ontario, Quebec and B.C., while also adjusting for faster growth in Alberta, Saskatchewan and Nova Scotia.
“The corresponding revision to our provincial outlook was unevenly distributed among provinces, but all regions are vulnerable to the uncertainty and volatility expected over the next six months,” said Marcil. “These headwinds will likely intensify at a time when constrained public finances leave very few tools available for Canadian governments to stimulate demand, or at least restore confidence.”
Alberta is expected to see Canada’s strongest employment growth, up 1.5% this year, compared to 0.8% nationally. It was already up 3.7% in Alberta last year. While unemployment will rise from 7.4% nationally last year to 7.6% this year, Alberta will replace Saskatchewan as the province with the lowest rate, at 5%.
“Saskatchewan, which usually acts as a responsive pool of spare workers for Alberta, is failing to do so currently because its economy is performing nearly as well as Alberta’s,” said Marcil.
Overall economic growth, based on real GDP, will increase most in Alberta, up 2.6%, followed by 2.4% in Saskatchewan. Nationally, it will rise just 1.7% this year, following a 2.4% gain last year.
The real estate markets in Vancouver and Toronto, however, are expected to hinder economic growth in their respective provinces, said the report. Toronto will be especially affected by its recent growth in condo developments, said Marcil.
“In addition to the growing pipeline of supply, the knock-on effects of financial market volatility to buyer confidence will likely result in a cooling down in condominium sales in the region in 2012 and 2013,” he said.
Marcil added that Vancouver’s real estate market peaked in 2011.
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