Quebec is forecast to lead the provinces in economic growth this year – the first time in recorded history with GDP rising by 2.4 per cent from last year, says Scotiabank’s Provincial Outlook which was released on Wednesday.
The report said that British Columbia and Alberta will lead the country in economic growth in 2020 and 2021, respectively.
Alberta’s economic growth is forecast to be 0.5 per cent this year followed by 2.4 per cent and 2.7 per cent in the next two years. B.C. is expected to have growth of 2.2 per cent this year followed by 2.8 per cent and 2.4 per cent in 2020 and 2021.
For Canada on the whole, GDP growth is predicted at 1.6 per cent this year, 1.8 per cent next year and 1.9 per cent the following year.
“We continue to anticipate a soft expansion in Alberta this year, with a rebound to growth of about 2.5 per cent in the ensuing two years. Oil and gas investment remains muted amid heightened uncertainty via insufficient pipeline transportation capacity,” said the Scotiabank report.
“That has translated into other corners of the provincial economy, reflected in employment growth well below the national average and softness to date this year across indicators such as home building, retail sales, and non-residential construction. With completion of the TransMountain pipeline not expected until at least 2022, sustainable supply-demand balance in the Western Canadian oil market and a stable light-heavy crude price differential is still at least a few years off. Yet work on pipeline projects as we progress through 2020 should generate an uptick in investment and contribute to stronger economic growth beyond this year.”
The report said activity related to major petrochemicals facilities is also expected to support the expansion in the coming years, and Scotiabank foresees an incremental boost to capital outlays vis-a-vis corporate tax rate reductions planned over the next four years.
“Further increases to the government-mandated oil production caps should lift oil and gas sector output and exports as well. Long-dormant energy security concerns were brought to the fore by recent attacks on major Saudi oil facilities that temporarily knocked nearly six per cnt of global crude supplies offline. Sentiment toward Canada’s oil patch—particularly Alberta’s voluminous oil sands deposits— has historically benefitted from such security concerns, which were part of the impetus for infrastructure projects like Keystone XL,” said the report.