While growth in Canada’s broader economy moderates, Canadian business owners are generally positive about their prospects, finds an economic outlook report from Bank of Montreal.
The report identifies two themes playing out across the country.
“First, oil prices have again become a downside risk for the three producing provinces,” says Robert Kavcic, BMO senior economist, in the report. Second, “most provinces are coming off very strong runs and are in the process of moving back in line with their longer-run growth rates,” he says.
The report finds that businesses are investing in innovation to increase productivity, and expanding into new markets, such as the U.S., to increase growth potential. For example, while Alberta’s growth is forecast at only 1.5% this year, innovation in technologies geared toward oil exploration and pipeline management remains a bright spot for its economy, as start-ups continue to emerge.
In a January economics report, RBC senior economist Josh Nye also said business confidence was holding up, despite a relatively soft handoff for GDP at the turn of the year because of energy-sector challenges. He cited Canada’s addition of 115,000 jobs in the last quarter of 2018, and an unemployment rate that fell to a 44-year low.
Further, the Bank of Canada business outlook survey showed generally positive sentiment, he said.
Such indicators “serve as evidence that Canada’s economy is performing better than incoming growth figures are likely to indicate,” he said.
Overall, BMO forecasts Canadian growth in 2019 at 1.8% annualized, down from an estimated 2.1% in 2018. The growth forecast for 2020 is 1.7%.
British Columbia is positioned to be the country’s leading economy this year, with growth of 2.5% on the heels of a $40-billion liquified natural gas project. That follows 2.2% growth in 2018.
After averaging 2.4% growth over the last four years, Ontario’s economy is forecast to pull back slightly to 2% in 2019. The report says businesses have been expressing a positive outlook in the province, propelled by strength in core sectors — manufacturing, agriculture and technology.
The slowest growth is expected in New Brunswick, at 0.7%, after stronger runs over the last couple of years. However, renewed corporate investment in the province will provide a needed boost, the report says.
For more provincial details, read the full BMO report.