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Economic Viewpoint

Desjardins Provincial Outlook

Canadian Provinces Are Faring Better than Expected, but the Resilience Is Uneven

October 29, 2026
Nom du rédacteur
Laura Gu
Senior Economist

Highlights

  • National economic performance is masking a deep regional divide. Recent data show more resilience than we expected. Exports recovered in autos and got a lift from energy and mining through the middle of the year, while most other tariff-exposed sectors stabilized. Robust hiring through the summer kept unemployment in check in most provinces, and retail sales gained momentum even excluding gasoline.
  • That strength appears concentrated, with Alberta leading on both jobs and spending, while Quebec trails on jobs and British Columbia (BC) on both. Ontario has surprised on the upside, narrowing its growth gap with the rest of the country.
  • Growth is set to slow in the second half of the year. The revised Section 338 list hits Ontario, Quebec, BC and Nova Scotia hardest, while Canada’s proposed counter-tariffs would weigh most heavily on the Prairies and Ontario.
  • Business investment should support the recovery, but the project pipeline favours resource regions. Real non-residential investment rose in every province in the first half of 2026, led by BC and Atlantic Canada. The major projects pipeline presented at the Canada Investment Summit leans heavily toward mining, energy and LNG, so the bigger medium-term investment gains ahead are likely to favour BC, Alberta and Atlantic Canada.
  • Stronger recent activity has lifted our forecasts, with an investment-led rebound expected next year. We have upgraded our 2026 and 2027 growth forecasts relative to our June Provincial Outlook, but the regional picture remains uneven (graph 1). Growth is expected to rebound in all provinces next year as investment picks up, with Alberta and BC expecting the largest acceleration.
  • The population slowdown has been milder than previously believed, for now. The latest revisions show a much smaller drop in non-permanent residents than first estimated. As a result, immigration kept Ontario, Quebec and BC growing instead of shrinking. Meeting Ottawa’s 5% target by 2027 would now require population declines in most provinces, but we view hitting this target as unlikely.
  • Higher energy prices have pushed inflation up unevenly across provinces. Provincial gaps should narrow in 2027 as inflation eases gradually.
NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.