While Canadian economy is moderating back in line with longer-term growth rates, the outlook of business owners across the country with regards to their prospects has generally remained positive.
Those were among the key forecasts outlined in the BMO Blue Book, released by BMO Economics and BMO Commercial Banking, which covers Western, Central, and Atlantic Canada.
“The Canadian economy has begun to moderate, with growth coming in at below 2 per cent in the second half of 2018,” said BMO Economics Senior Economist Robert Kavcic. Looking ahead to 2019, he noted two major themes that the firm sees playing out: a downside risk from oil prices for the three producing provinces, and a movement among most provinces from very strong runs to moderate growth rates in line with long-term records.
“Amidst a slowing economy, businesses across the country are investing in innovation to increase productivity, as well as expanding into new markets such as the U.S. to increase their growth potential amidst changing economic conditions,” said Dev Srinivasan, head of Canadian Commercial Banking at BMO Bank of Montreal. He predicted that the trend will help make the Canadian business community more competitive overall.
He went on to emphasize the key economic role of small and medium enterprises, which employ more than 90% of the private-sector labour force, in 2019 and beyond.
Focusing on Western Canada, the report said British Columbia is poised to be the country’s leading economy, reaching 2.5% GDP growth this year from 2018’s 2.2%. This is off an expected boost from the liquefied natural gas project, continued migration into the province, a diversified industry base, and a strong job market. The weaker oil-sector backdrop contributes largely to a softened projection of 1.5% GDP growth for Alberta, though a bright spot remains from innovation in oil-exploration and pipeline management technologies. Saskatchewan is also expected to grow by a moderate 1.4% this year as the oil-price downturn and economic headwinds take hold.
In Central Canada, Ontario’s average 2.4% growth over the last four years should ease to 2% in 2019, though strength in the core sectors of manufacturing, agriculture, and technology is driving a positive business outlook in the province. The 1.9% projection for Quebec comes from a view of renewed strength and significant liquidity for the financing of projects. Meanwhile, steady performance from Manitoba has it on track for 1.8% growth this year, fuelled primarily by its manufacturing base and service sector, though rising interest rates might temper some business activity.
Finally for Eastern Canada, New Brunswick is projected to slow to 0.7% this year, though renewed corporate investment will provide a much-needed shot in the arm. Growth for Nova Scotia is pegged at 0.9% as business opportunities continue to grow; Prince Edward Island is forecast to see modest 1.2% growth as recent trade tensions and a poor growing season inspires caution among fisheries and agriculture businesses, which represent two key industries.
“Newfoundland & Labrador is shaking off a 1 per cent contraction in 2018, with economic growth likely to come in at 1.5 per cent this year,” the report said.
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