Economic slowdown on the horizon for western Canadian cities
Nov 20, 2018, 08:00 ET
OTTAWA, Nov. 20, 2018 /CNW/ - Canada's major western cities will see their real GDP growth ease from above 3 per cent in 2017 to around 2.6 per cent or less in 2018, according to the Conference Board of Canada's Metropolitan Outlook: Autumn 2018. Winnipeg will have the fastest growing metropolitan economy among western cities this year, and rank behind only Montreal nationwide.
"While the economies of Canada's western cities will remain healthy, a repeat of last year's strong performances is not in the cards, as rising interest rates and high household debt have taken a bite out of both consumer spending and housing market activity," said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. "Next year, western cities will once again be among the top economic performers, but the pace of economic expansion will remain moderate."
Highlights
- Winnipeg will have the fastest growing metropolitan economy among western cities this year, behind only Montreal nationwide.
- Calgary and Vancouver will see economic growth ease from above 4 per cent last year to 2.5 and 2.6 per cent, respectively, in 2018.
- With real GDP gains of 1.5 per cent in 2018, Regina's economy will have the slowest growth rate among the 13 census metropolitan areas covered in this report.
Winnipeg
Following a 3.4 per cent gain last year, Winnipeg's economy is on track to grow by 2.7 per cent in 2018 and 2.0 per cent in 2019. The construction sector will be the city's fastest growing industry, although it is projected to shift into lower gear next year as a second consecutive drop in housing starts offsets decent gains in non-residential activity. Likewise, two of Winnipeg's tourism-related industries—accommodation and food, and arts entertainment and recreation—are on track to post output growth of more than 6 per cent this year, but cool considerably next year. Despite the economic slowdown, the local economy is expected to generate a total of more than 11,200 new jobs over the next two years.
Vancouver and Victoria
After posting real GDP gains of 4.5 per cent in 2017, growth in Vancouver's economy is forecast to moderate to 2.6 per cent this year and 2.4 per cent in 2019. A key factor in Vancouver's more modest outlook is the region's cooling housing market. Although the resale market rallied last year, activity is slowing once again as number of factors combine to dissuade home buyers, including federal and provincial government housing market cooling measures. As a result, the construction sector and the finance, insurance, and real estate industry—two sectors that been key growth drivers in recent years—are anticipated to slow over the near term. In line with a slower economy, employment growth is poised to decelerate to 1.1 per cent this year before picking up slightly in 2019.
Victoria's public administration industry will remain strong this year before a shrinking provincial surplus constrains growth over the next few years. Growth is also expected to moderate among Victoria's commercial services industries. A slowing job market and rising interest rates will sway consumers to curb their purchases, limiting gains in the retail and wholesale trade sectors. Overall, Victoria's economy is forecast to expand by 2.4 per cent this year and 2.0 per cent in 2019. Job growth has been very strong since 2015; another solid employment gain is in the cards this year, but we anticipate a modest pullback in 2019.
Calgary and Edmonton
Calgary and Edmonton are continuing to recover, though the pace of growth is moderating. Pipeline capacity constraints mean the energy sector and related industries in the two Alberta cities are not reaping the full benefits of higher oil prices. All in all, Calgary and Edmonton's economic growth prospects pale in comparison to those of the boom years over 2010-14. On a positive note, job growth is expected to remain decent in both cities over the near term.
Calgary's economy is expected to expand by 2.5 per cent this year and 2.3 per next year, down from last year's booming 4.9 per cent increase. Although modest, growth in the Calgary economy will be widespread, with the primary and utilities sector, which includes oil and gas extraction, manufacturing, and construction all expected to post gains in the next two years. Most of the region's services sectors are also forecast to post growth higher than 2 per cent this year and next. The wholesale trade sector will lead the way, followed by the transportation and warehousing industry, thanks to growth in energy exports.
In Edmonton, economic growth will be led by the oil and gas industry and construction. The local construction sector is poised to grow for the first time in four years in 2018, with a similar expansion on tap for next year thanks to stronger energy investment and the continued downtown revitalization. At the same time, the services-producing industries are on track to record broad-based growth this year. In all, Edmonton's economy is forecast to grow by 2.3 per cent in each of 2018 and 2019.
Saskatoon and Regina
Persistently weak commodity prices, particularly in potash, are contributing to the moderate outlooks for Saskatoon and Regina. Saskatoon's real GDP is forecast to rise 2.0 per cent in 2018 and a slightly faster 2.4 per cent in 2019. The slowdown will be broad based with all sectors of the economy expected to see more tepid gains. In particular, Saskatoon's construction sector is expected to register negligible output growth starting in 2019.
Regina's manufacturing and construction sectors will see solid growth this year before cooling in 2019. The city's services-producing industries will trail the goods sector in both years. But on a positive note, services sector output growth is projected to reach 2.0 per cent next year, which would mark its strongest performance since 2014. Overall, Regina's real GDP is forecast to rise 1.5 per cent in 2018 and 2.2. per cent in 2019.
Montreal will be the fastest growing metropolitan economy among the 13 census metropolitan areas covered in this edition of the Metropolitan Outlook, with real GDP on track to advance by 2.9 per cent in 2018.
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SOURCE Conference Board of Canada
For further information: Yvonne Squires, Media Relations, The Conference Board of Canada, Tel.: 613- 526-3090 ext. 221, E-mail: [email protected]; or, Juline Ranger, Director of Communications, The Conference Board of Canada, Tel.: 613- 526-3090 ext. 431, E-mail: [email protected]