Prairie cities to have best economic growth in 2013

Saskatoon and Regina will be the fastest growing metropolitan economies in the country this year. Calgary and Edmonton are also forecast to have some of the strongest growth rates in the country, but neither are “booming” like they were prior to the 2008-09 recession, according to the Conference Board of Canada’s Metropolitan Outlook-Winter 2013 forecast for 28 Canadian census metropolitan areas (CMAs).

Regina’s economy is slowing by its own recent standards, from real GDP growth of 4.2% in 2012 to 3.5% in 2013, but growth remains robust. The Regina CMA is effectively at full employment, but jobs continue to be created — employment is expected to grow by 3.5% this year. Regina’s population has grown by about 2% for four straight years, providing support to the area’s services-producing industries and housing market.

Real GDP in Calgary grew by 3.3% in 2012, and is forecast to grow at a similar pace in 2013. Calgary continues to benefit from its role as services hub for Alberta’s growing energy industry.

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There is, however, a heightened risk of slower growth in the outlook, as a result of the unusual amount of uncertainty in the energy sector. The “bitumen bubble” (price discount between Alberta’s oil and world prices), along with lower natural gas prices, pose downside risks to the forecast.

Edmonton led the country in real GDP growth in both 2011 and 2012, at 6.6% and 4.4%, respectively. However, growth is forecast to moderate starting in 2013, when it is projected to reach 3.2%. In addition, if pipelines are not built to meet rising oil sands production, Edmonton’s medium-term outlook could be trimmed.

Vancouver’s economic growth is expected to accelerate slightly from 2.5% last year to 2.9% in 2013. The medium-term outlook sees growth averaging 3% annually through 2016. The CMA’s housing market is slightly overbuilt at present, which will slow residential construction in 2013 and 2104.

Employment in the Abbotsford-Mission CMA grew by 5.3% in 2012, its biggest jump in 10 years. Although job growth will slow in 2013, real GDP will grow by 2.7% in both 2013 and 2014, a slight acceleration over the 2.4% average growth recorded over the previous two years. Signs of life in the U.S. housing market will boost the outlook for the area’s wood products manufacturing sector.

Winnipeg’s economy will be held to 2% growth in 2013. Growth in the manufacturing sector — thanks to higher demand for bus transportation — and an improving services sector will be partly offset by a weaker construction outlook.

Outside of western Canada, Toronto is expected to have the fastest-growing economy in 2013 (at 2.8%), and over the next four years (2.7% per year on average from 2014 to 2017). Toronto economic growth fell below 2% in 2012, but improvement in the U.S. economy should help its manufacturing sector in 2013. A faster rate of job creation will also benefit the domestic economy.

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Kitchener-Cambridge-Waterloo and Oshawa are expected to post economic growth of 2.7% and 2.6% respectively, this year. Moncton is forecast to boast the strongest growth rate in Atlantic Canada at 2.5%, followed closely by Halifax and St. John’s.

Reductions in public sector employment are limiting economic growth in cities that serve as capitals, notably Victoria and Ottawa-Gatineau. Both CMAs grew by just 0.9% apiece in 2012 and the outlook is only slightly stronger for 2013.

Victoria’s economy is forecast to expand by 1.8%, as public sector employment is forecast to decline for the third consecutive year. The area’s soggy job market is trimming population growth, which, in turn, is curtailing housing demand.

Ottawa-Gatineau’s economy is feeling the pinch of downsizing in the federal government, the region’s largest employer. Public sector employment is expected to fall over the next three years – including a 3.8% decline this year. Accordingly, Ottawa’s real GDP growth is forecast to come in at 1.3% in 2013 — 26th out of 28 CMAs.

Quebec City is expected to lead the five CMAs located in Quebec with economic growth of 2.1% in 2013. The construction of a new NHL-sized arena is providing a boost to the economy.

Elsewhere in Quebec a slight malaise seems to be permeating Montreal’s economy. After real GDP growth of just 0.8% in 2012, Montreal’s economy is expected to expand by 1.7%. Trois-Rivieres is the only Canadian CMA whose economy is expected to contract this year, in part because of the recent announcement to close the Gentilly 2 nuclear power plant.

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