- Canada's real GDP growth is expected to moderate to 1.8 per cent this year, as most provinces come back in line with their longer-run trends
- Overall business sentiment remains positive in most regions
- British Columbia is expected to outperform all provinces in 2019, growing 2.5 per cent
TORONTO, Feb. 5, 2019 /CNW/ - With the broader Canadian economy moderating back in line with longer-run growth rates, business owners across the country generally remain positive about their prospects, according to forecasts in the BMO Blue Book released today by BMO Economics and BMO Commercial Banking. The Blue Book covers Western, Central, and Atlantic Canada.
Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the insights of BMO's economists with data on current national and provincial business conditions, as well as BMO's commercial bankers with sentiment from local businesses.
"The Canadian economy has begun to moderate, with growth coming in at below 2 per cent in the second half of 2018," said Robert Kavcic, Senior Economist, BMO Economics. "Across the country, we see two major themes playing out in 2019. First, oil prices have again become a downside risk for the three producing provinces. Elsewhere, most provinces are coming off very strong runs and are in the process of moving back in line with their longer-run growth rates."
"Amidst a slowing economy, businesses across the country are investing in innovation to increase productivity, as well as expanding into new markets such as the U.S. to increase their growth potential amidst changing economic conditions, which is an encouraging trend that will help bolster the overall competitiveness of the Canadian business community," said Dev Srinivasan, Head, Canadian Commercial Banking, BMO Bank of Montreal.
Mr. Srinivasan noted a perspective he often hears from BMO's commercial bankers from across the country: that the small and medium enterprises will continue to be key growth drivers for Canada's economy in 2019 and beyond. "Canada's small and medium sized businesses employ more than 90 per cent of the private sector work force, and ensuring the continued growth and long-term success of these enterprises is key to reaching the country's full economic potential. We're here to help these businesses compete and trade with each other – a critical element in supporting Canada's economic prosperity at home, as well as its competitive position on the world stage."
Mr. Srinivasan added BMO's best-in-class cross-border banking capabilities have helped clients across the country to build seamless operations between Canada and the United States by monitoring trends in both countries, executing transactions, and maintaining flexible negotiations with international suppliers, clients and distributors.
2019 Provincial Forecasts At-a-Glance:
- British Columbia is positioned to be the country's leading economy. After moderating to about 2.2 per cent last year, GDP growth is expected to get a boost this year (to 2.5 per cent) on the heels of the liquefied natural gas project. While some moderation is expected, businesses are bullish on growth moving forward, propelled by continued migration into the province, a strong job market, and a diversified industry base.
- Alberta's economy is softening, in large part, due to the weaker oil sector backdrop, with GDP growth expected to come in at 1.5 per cent. While business sentiment, overall, remains cautious, innovation in technologies geared towards oil exploration and pipeline management remains a bright spot for the economy, as start-ups continue to emerge.
- Saskatchewan's economy is anticipated to advance a moderate 1.4 per cent this year, subdued by the downturn in the price of oil. Economic headwinds are dampening some business activity in the province. However, in manufacturing, businesses are looking to benefit from the region's central location within North America and will be increasingly keen to take advantage of export opportunities in the coming year.
- After averaging 2.4 per cent growth over the last four years, Ontario's economy should pull back slightly to 2 per cent in 2019. Businesses have been expressing a positive outlook in the province, propelled by strength in core sectors – manufacturing, agriculture, and technology.
- Economic growth in Quebec is expected to be come in at the 1.9 per cent mark in 2019. Businesses are indicating that there is renewed strength in the economy, which should lead to expansion across the province, with significant liquidity in the market for the financing of projects.
- Manitoba continues to churn out some of the steadiest performance in Canada with growth on track to come in at 1.8 per cent this year, in large part due to its manufacturing base and sturdy service sector. Rising interest rates might temper some business activity, but overall sentiment remains positive.
- The New Brunswick economy is slowing and should come in around 0.7 per cent this year, after stronger runs over the last couple of years. Renewed corporate investment in the province will provide a needed boost.
- Nova Scotia is pegged to experience growth at 0.9 per cent. Business opportunities continue to grow throughout Nova Scotia, with good prospects for economic expansion.
- Growth in Prince Edward Island is forecast to come in at a modest 1.2 per cent in 2019. Businesses in two major industries – fisheries and agriculture – are showing signs of caution, in the wake of recent trade tensions and a poor growing season.
- Newfoundland & Labrador is shaking off a 1 per cent contraction in 2018, with economic growth likely to come in at 1.5 per cent this year. With some sectors turning the corner, businesses are showing renewed optimism.
The full BMO Blue Book can be downloaded at https://economics.bmocapitalmarkets.com/
For more on BMO's cross-border services, please visit https://www.bmo.com/main/business/cash-management#cross
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $774 billion as of October 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
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