Ontario, British Columbia and Manitoba are forecast to be the provinces with the best economic performance in Canada this year, due to the collapse in oil prices and changing business environment in the country, states the Conference Board of Canada (CBoC).
“Ontario, with its minor exposure to the oil and gas extraction sector, is expected to receive a significant economic boost in the short term,” said Marie-Christine Bernard, CBoF provoincial economic trends associate director, in a press statement.
A recent CBoC report predicts that B.C., Manitoba and Ontario will all expand at a faster rate than the Canadian economy, which is forecast to post real growth in gross domestic product (GDP) of 1.8 per cent in 2015. This represents a drop from 2.4 per cent last year. The fall in the price of West Texas Intermediate crude to about $50 a barrel in the first part of February, from more than $100 in early August 2014, is having a ripple effect on the national economy. However, at the provincial level the impact of falling oil prices will be highly uneven.
For example, Ontario’s economy is projected to grow by 2.9 per cent this year, bolstered by strong exports and consumer spending. This is the first year since 2002 in which economic growth in Ontario will be greater than the national average.
Households in Ontario are expected to have up to $1,000 more in discretionary income in 2015, which will boost household consumption 3.2 per cent.
Ontario’s exporters benefit from increased demand stimulated by a healthy U.S. economy, which is set to grow by 3.2 per cent in 2015. The falling Canadian dollar is also making Ontario’s products more competitive and boosting its exports to the U.S.
In 2016, Ontario is forecast to be the fourth fastest growing provincial economy with an expected real GDP growth of 2.6 per cent.
British Columbia is expected to lead the country in economic growth with real GDP of 3 per cent in 2015, compared to 2.8 per cent in 2014.
“The growth will be led by a number of industries that will benefit from the stronger U.S. economy, the lower Canadian dollar, and increasingly upbeat consumers,” said the report. “The manufacturing and transportation industries are expected to perform particularly well in this environment. In addition, the housing market slowdown that is expected at the national level will not be seen in British Columbia, as housing demand there remains healthy.”
In 2016, Ontario is forecast to be the third fastest growing provincial economy with an expected real GDP growth of 2.7 per cent.
The near-term outlook for the B.C. economy is positive, but there is uncertainty surrounding the development of the province’s liquefied natural gas (LNG) industry.
A much-awaited decision by Petronas and its partners to move forward with their $36-billion Pacific Northwest LNG project is expected this year. If that project goes ahead, it would be a game changer for B.C.’s energy sector.
Manitoba is expected to be tied with Ontario as the second fastest growing province with real GDP of 2.9 per cent, compared to 2 per cent in 2014. Its construction industry is expected to expand by 8.5 per cent in 2015 and 10.7 per cent in 2016.
The Bipole III Transmission Reliability Project in Manitoba is scheduled to break ground in 2015. The demand for housing is increasing with healthy population growth and the provincial government is investing heavily in infrastructure projects.
Manitoba’s agricultural industry is forecast to make a comeback in 2015, with growth of 5.8 per cent in 2015 and 2.6 per cent in 2016. Manufacturing in that province will see moderate growth over the next two years as the improving U.S. economy, lower Canadian dollar and lower oil prices help boost exports. As a result, transportation and warehousing is expected to continue to grow, with strong gains of 3.4 per cent in 2015 and 3.9 per cent in 2015. In 2016, Manitoba is expected to lead the country in economic growth with real GDP of three per cent, according to the report.
Follow Richard Gilbert on Twitter @buildingcanada.
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Mar 5, 2015
