The Canadian economy rebounded strongly in the second quarter, with growth expected at three per cent after back-to-back quarters at less than 0.5 per cent, says a new report by BMO Economics.
“Oil production curbs in Alberta have begun to ease, while net exports came roaring back and a decline in long-term interest rates has helped firm the housing market,” says the Provincial Monitor report. “Full-year 2019 growth, however, is expected to soften further to 1.4 per cent, from 1.9 per cent in 2018, in part because of a very weak handoff. Across the country, convergence remains a major theme, with most provinces seeing growth settle in around expected longer-run norms. And, there have been few major changes to the regional forecast since the spring.”
The report forecasts Canadian economic growth of 1.6 per cent in 2020.
“Alberta real GDP growth is expected to slow in part because of mandated oil production cuts that pulled 325,000 bpd (barrels per day) offline in January. While curbs are gradually easing, 2019 output growth will be depressed at 1.3 per cent. More broadly, capital spending, housing and consumer activity set a still-sluggish backdrop for the province,” says BMO, adding that growth of 1.9 per cent is expected for 2020.
The province saw economic growth of 2.3 per cent last year.
The report offers these provincial and regional forecasts:
- British Columbia is expected to remain at the front of the pack, even though growth is projected to cool further to 1.8 per cent, after already slowing meaningfully last year.
- Saskatchewan looks to be relatively stagnant as well around the 1.0 per cent range, with slower population growth and an overhang of past housing supply still weighing on home prices.
- Manitoba should continue its steady performance, with growth expected at 1.6 per cent this year.
- Ontario real GDP is expected to grow 1.6 pr cent this year, down from 2.2 per cent in 2018 and an average pace of 2.5 per cent in the four years prior to that.
- Quebec real GDP is expected to grow 1.6 per cent this year, down from 2.5 per cent in 2018 and 2.8 in 2017.
- A population boost has lifted growth in much of Atlantic Canada well above potential over the past few years. While that is persisting into 2019, we believe the process of gradually returning to trend will play out in this part of the country as well.