- Region's GDP is expected to rise 2.3 per cent on average, slightly above the national average for 2018
- Steady growth led by B.C. alongside a strong labour market
- Alberta bounces back from -3.8 per cent GDP growth, to potentially lead all provinces with 4.1 per cent growth this year
TORONTO, Oct. 30, 2017 /CNW/ - Following strong economic results in 2017, Western Canada remains on pace to lead growth in Canada again this year, according to the BMO Blue Book released today. Assuming real estate and consumer spending trends are sustained in Alberta and B.C., the region is expected to maintain combined growth above 2 per cent for 2018.
Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the insights of BMO's economists with information on current national and provincial business conditions provided to BMO's commercial bankers by local business people.
Coming off strong results last year, British Columbia is expected to post a fourth consecutive year of GDP growth in excess of 3 per cent, hitting the 3.8 per cent mark in 2017. The province's performance is expected to moderate after that, assuming labour market and consumer spending trends remain steady.
The housing market has picked back up as the impact of the province's cooling measures has faded. Even though benchmark prices were up 10.9 per cent year over year as of September, B.C.'s lower unemployment suggests its labour market can support a higher cost of living more than elsewhere.
According to BMO Capital Markets Senior Economist Robert Kavcic, B.C.'s employment growth leads all provinces. "The jobless rate is nearing a decade low at 5.1 per cent. That is drawing in increased migration from other Canadian provinces, adding a steady stream of international inflows of more than 50,000 in total in the 12 months through June."
Entering 2018, B.C.'s credit rating is the strongest in the country, with a projected $246 million surplus this fiscal year. This, however, could change in the event of a shift in spending priorities.
"The B.C. economy continues to outpace provincial peers and reflects the optimism our customers have in local markets," adds Mike Bonner, Senior Vice President and Regional Head, British Columbia & Yukon Division, BMO Bank of Montreal.
Following the challenges posed by last year's wildfires, Alberta has shown resilience through rebuilding efforts across sectors. Coming out of 2016 with -3.8 per cent GDP growth, the province's strong bounce-back could potentially lead the country this year with 4.1 per cent growth in GDP.
"While economic growth in the province could lead the country this year, we've held back our optimism given a still-high jobless rate, plenty of slack in some sectors and the expectation that growth will settle down with rangebound oil prices," according to Mr. Kavcic.
On the other hand, Susan Brown, Senior Vice President, Alberta & NWT, BMO Bank of Montreal, points to resilience within the province's business climate.
"We're seeing more commercial lending and improved balance sheets across the province. While the add-on effects of reinvestment, such as new hirings, usually take a year or two to be seen, we're confident improvement is on the way," said Ms. Brown. "The worst is behind us."
Further, the province's jobless rate has risen above the national average for the first time in 27 years. The energy sector, although lacking new capital investment, is likely to continue maintenance of existing projects. Although there has been a rise in commercial real estate vacancies, the housing market has stabilized.
After several soft years, Saskatchewan is starting to see positive growth. GDP is expected to advance at a moderate 1.7 per cent in 2017 – underperforming the national average, but marking a turnaround after two consecutive years of negative growth.
Although Saskatchewan's economy remains subdued as the effects of the oil price downturn linger, the return to modest growth is a positive development.
"The oil sector has been retrenching, with the province expecting relatively stable production over the near term," says Mr. Kavcic.
While oil and gas account for roughly 15 per cent of the province's GDP, a significant weight falls onto agriculture and the labour market as well. Crop production remained challenged by dry weather this year, and as a result, the province continues to lose migrants to neighboring regions.
"BMO clients look to us for guidance during these times, and when it comes to coping with issues like possible interest rate increases, we encourage them to come in and speak to us to devise an appropriate strategy tailored to them," said John MacAulay, Senior Vice President for Prairies and Central Canada for BMO Bank of Montreal.
BMO is here to help with a highly-skilled team of experts who can make lending decisions at the local level to help the bank's commercial clients boost productivity, expand into new markets and make strategic investment decisions that will help propel growth and drive success.
The full BMO Blue Book can be downloaded at: www.bmocm.com/economics.
About BMO Financial Group
Established in 1817, and currently marking its 200th year of operations, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $709 billion as of July 31, 2017, and more than 45,000 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, Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group
For further information: Media Contacts: Michelle Agnelo, Toronto, Michelle.Agnelo@bmo.com, (416) 867-3996; Matthew Duffin, Toronto, Matthew.Duffin@bmo.com, (416) 867-3996; Valérie Doucet, Montreal, Valerie.Doucet@bmo.com, 514-877-8224; Internet: www.bmo.com; Twitter: @BMOmedia