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Economic Viewpoint

Provincial Outlook: Canada’s Provinces Are Facing a “Productivity Emergency” Too

May 9, 2024
Marc Desormeaux, Principal Economist • Hélène Bégin, Principal Economist

We still anticipate that Canada’s oil-producing provinces will fare the best in the coming quarters. By contrast, more interest rate-sensitive provinces will feel more pain, as the full effects of already completed monetary tightening result in slower economic growth.

Higher levels of operating and infrastructure spending forecast in this year’s provincial and federal budgets should offer a modest incremental boost to economic growth rates this year.

We expect Ottawa’s planned reductions in the non‑permanent resident (NPR) population to weigh down national and provincial growth in 2025 and 2026. Our analysis suggests Ontario and BC are the most vulnerable to the policy change.

But perhaps the biggest takeaway from the latest GDP data is that the “productivity emergency” recently raised by the Bank of Canada is a nationwide crisis. Output per capita fell in every province last year, which was the broadest-based standard of living decline in recorded Canadian history other than during the pandemic. So while the weak economic growth rates we’re projecting may not be persistent or severe enough to qualify as a “recession,” for many Canadians the next few quarters may feel like one.

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.