Canada’s Economic Landscape in 2024: Regional Shifts and Trends
As we analyze Canada’s economic performance in 2024, it becomes clear that steady national growth is masking significant regional disparities. The first provincial GDP estimates reveal that the Prairie provinces, notably Alberta, Saskatchewan, and Manitoba, have emerged as leaders in economic growth, marking a stark departure from 2023, where Ontario was the primary contributor to national growth. Additionally, Canada’s eastern provinces have recorded above-average GDP growth, while the traditionally prosperous Ontario and British Columbia lag behind.
PRAIRIES: The Growth Powerhouse
The Prairie provinces played a pivotal role in driving national growth in 2024, collectively accounting for over one-third of Canada’s economic expansion. This surge is attributed to a combination of robust in-migration and favorable conditions in commodity markets, although Manitoba faced challenges from its utilities sector.
Alberta: Oil and Population Drive Growth
Alberta stands out as a significant contributor, adding more than a quarter to Canada’s economic growth. The province experienced a remarkable 3.7% increase in oil and gas extraction, which bolstered its goods-producing sector substantially. Additionally, strong population growth has invigorated service industries, creating a balanced and dynamic economic environment.
Saskatchewan: Mining and Construction Boom
Saskatchewan benefited notably from a skyrocketing output in metal ore mining, which increased by 36%, alongside an 8.3% rise in potash extraction. While manufacturing faced a 4.6% decline, construction emerged as a key growth driver with a notable 13% increase, predominantly supported by ongoing projects such as the Jansen Potash mine.
Manitoba: A Mixed Bag
In stark contrast, Manitoba’s economic performance was dampened by a 5.1% decline in the utilities sector, primarily due to low water reservoir levels from droughts in 2023. This setback slowed the province’s overall growth, emphasizing the region’s vulnerabilities amid favorable growth conditions in neighboring provinces.
EASTERN CANADA: Accelerating Growth Amid Challenges
Turning our focus to Eastern Canada, the region witnessed accelerated growth led by gains in the services sector. Although population growth slowed significantly, various factors including public sector expansion and construction activity propelled economic performance across several provinces.
Quebec: Services Resilient Amidst Manufacturing Decline
In Quebec, the services sector played a crucial role in offsetting a 0.8% decline in goods production, particularly driven by a 2.6% drop in manufacturing. Noteworthy, the resolution of a strike within educational services led to a rebound, contributing to a 1.3% real GDP growth in 2024, effectively doubling the pace compared to the previous year.
Nova Scotia and Newfoundland and Labrador: Recovery and Reinforcement
Nova Scotia capitalized on strong performances across various service sectors, although setbacks from declines in the mining industry, particularly the closure of the Touquoy Gold Mine, limited growth.
Conversely, Newfoundland and Labrador experienced a significant turnaround in 2024, rebounding from two consecutive years of decline. The province’s 2.4% real GDP expansion was largely supported by a robust 4.6% recovery in oil and gas extraction, along with a remarkable 34% surge in metal mining.
New Brunswick: A Balancing Act
New Brunswick showcased a blend of growth and challenges, with services expanding robustly—particularly in public administration and healthcare—thanks to the resolution of previous labor disputes. Nevertheless, the utilities sector remained a considerable detractor from overall growth, declining by 18.1% amidst lower electricity generation and reduced out-of-province sales.
Prince Edward Island: Leading the Charge
Prince Edward Island led the charge in 2024 with an impressive real GDP growth of 3.6%. The growth was primarily fueled by the real estate and rental/leasing sectors, alongside substantial gains in healthcare and social assistance. Additionally, surges in residential construction, which rose by 14%, marked a notable increase in housing starts that approached record levels.
ONTARIO & BRITISH COLUMBIA: Economic Moderation
Both Ontario and British Columbia, typically seen as the most interest-rate sensitive economies, exhibited moderated growth in 2024. The residual effects of previous interest rate hikes from the Bank of Canada continued to weigh on household budgets and business investments, particularly impacting the construction and real estate sectors.
Ontario: A Notable Slowdown
Ontario’s economic trajectory was adversely affected by a notable downturn in goods production, which fell by 2.3%, coupled with a concerning 4.7% decline in manufacturing. The province’s ongoing struggles in residential construction culminated in a dip in real GDP growth to 1.2% in 2024, down from the 1.8% recorded the previous year.
British Columbia: Slowing Growth Engine
Similarly, British Columbia saw its economic growth engine sputter in 2024, with overall GDP expansion halving to 1.2% from 2.4% in 2023. A significant drop in construction activity, where residential construction fell by 8.8%, coupled with declines in manufacturing output, weighed heavily on the province’s economic performance.
In conclusion, the economic picture across Canada in 2024 highlights a complex interplay of growth and challenges across various regions. While the Prairie provinces and Eastern Canada have established themselves as growth leaders, Ontario and British Columbia face notable hurdles. This evolving economic landscape emphasizes the importance of understanding regional dynamics and the varying factors that influence growth across the country.
Rachel Battaglia is an economist at RBC, contributing her expertise to the Macro and Regional Analysis Group, providing insights for the provincial macroeconomic outlook and budget commentaries.
