Canada’s Economic Landscape: Regional Growth in 2024
As we step into 2024, Canada’s economy showcases a largely steady growth trajectory compared to 2023. However, beneath this façade of uniformity lies a tapestry woven with notable regional shifts. The newest provincial GDP estimates reveal that the Prairie provinces are set to take the spotlight as leaders of economic growth, a significant change from the previous year when Ontario held that title. Eastern Canada has also seen improvements, exhibiting above-average growth, while Ontario and British Columbia (B.C.) lag behind.
The Prairies: A Powerhouse of Growth
The Prairie provinces—Alberta, Saskatchewan, and Manitoba—collectively accounted for over one-third of Canada’s national growth last year. Several factors have contributed to this dynamic shift.
Alberta: The Economic Titan
Alberta emerged as a significant economic contributor in 2024, contributing over a quarter of national growth. The province enjoyed a remarkable 3.7% increase in oil and gas extraction, rejuvenating its goods-producing sector. Coupled with strong population growth, there was also a noticeable uplift in Alberta’s services industries, creating a robust economic environment.
Saskatchewan: Mining and Construction Gains
Saskatchewan capitalized on increased output in its key sectors. Metal ore mining surged by an astounding 36%, while potash mining increased by 8.3%. Although manufacturing saw a decline of 4.6%, the construction sector experienced a booming 13% growth, largely driven by ongoing projects like the Jansen Potash mine.
Manitoba: A Cautionary Tale
Contrasting with its Prairie counterparts, Manitoba struggled in 2023, with overall growth slowing due to a significant setback in the utilities sector, which contracted by 5.1% due to drought-induced low water levels.
Eastern Canada: A Surge in Growth
The eastern provinces, led by a resurgence in the services sector, experienced accelerated growth despite a slowdown in population increases.
Quebec: Services on the Rise
Quebec can’t be overlooked in this growth narrative; while the province experienced a 0.8% decline in goods production linked to a 2.6% drop in manufacturing, the services sector fared much better. Educational services rebounded following educational strikes, supporting a real GDP growth of 1.3% in 2024—doubling the previous year’s performance.
Nova Scotia: Strength in Services
In Nova Scotia, robust service sector growth largely defined its economic landscape. However, headwinds from declines in the mining sector, notably the closure of the Touquoy Gold Mine, held back what could have been a more robust economic expansion.
Newfoundland and Labrador: A Resilient Recovery
After facing two consecutive years of decline, Newfoundland and Labrador’s economy rebounded in 2024, with 2.4% real GDP growth. This recovery was primarily fueled by a 4.6% rebound in oil and gas extraction and a remarkable 34% surge in metal mining.
New Brunswick: Navigating Challenges
While New Brunswick saw some growth in services, underlying weaknesses in goods production persisted. However, faster growth in public administration and healthcare stemmed from addressing healthcare shortages and labor disputes. The utilities sector, unfortunately, detracted significantly from overall growth, plummeting by 18.1% due to reduced electricity generation.
Prince Edward Island: The Top Performer
Leading the charge, Prince Edward Island achieved an impressive real GDP expansion of 3.6% in 2024, driven largely by robust activities in real estate and healthcare, along with a 14% surge in residential construction.
Ontario and British Columbia: Growth Moderation
In contrast to the accelerating Eastern and Prairie provinces, both Ontario and British Columbia have experienced a pulling back of growth.
Ontario: Economic Ebb
Ontario’s economic performance has felt the weight of declining goods production (down 2.3%) and manufacturing (down 4.7%). For the third consecutive year, residential construction has also faced challenges, pulling real GDP growth down to 1.2% in 2024, a decrease from 1.8% in 2023.
British Columbia: A Slowdown
British Columbia’s growth engine has sputtered in 2024, seeing real GDP expansion halving to 1.2% from the previous year’s 2.4%. The construction sector particularly struggled, with activity contracting by 5.7% and goods production dropping by 2.9%.
In conclusion, while Canada’s overall growth appears steady, it obscures significant regional disparities. The rise of the Prairies as the new economic leaders, alongside a revival in Eastern Canada, marks a distinct shift in the country’s economic landscape. Meanwhile, Ontario and B.C. grapple with the consequences of previous interest rate hikes, underscoring the need for vigilance as the economic environment evolves.
Rachel Battaglia is an economist at RBC, specializing in provincial macroeconomic forecasts and budget commentaries.
