Canadian cities will continue to experience slow growth throughout most of 2024, as higher interest rates and constrained consumer spending continue to weigh on the economy.
According to new research from The Conference Board of Canada, a slight rebound is expected in the latter half of the year. The Bank of Canada’s aggressive interest rate hikes are helping to control inflation nationwide, but consumer prices will remain above the central bank’s 2.0 percent target for the first half of 2024, says Jane McIntyre, Principal Economist at The Conference Board of Canada.
Inflationary pressures will continue to constrain economic growth; however, we expect interest rate cuts to start later in the year, which will help increase growth moving into 2025. Migration is driving Calgary’s population growth. While high federal immigration targets are drawing international newcomers, the city’s healthy economy and affordable housing are attracting Canadians from other regions. The city’s GDP is forecast to grow 2.0 percent in 2024 before increasing a further 3.2 percent in 2025. With Saskatoon’s disposable income per capita projected to plateau in 2024, households are likely to feel stressed to curtail spending over the coming year.
Amid this weaker outlook, anticipated improvements in the city’s resource sectors offer some optimism. In 2024, GDP growth is estimated to be just 1.6 percent, before increasing a further 2.4 percent in 2025. Despite Edmonton’s robust migration-fueled population growth, the current easing of oil prices indicates an impending slowdown in the economy. The city’s GDP is expected to grow 1.5 percent in 2024 before increasing a further 3.4 percent in 2025.
Persistentinflation and rising interest rates are reducing the demand for goods, constraining Hamilton’s retail and wholesale trade and leading outputs from both consumer-driven sectors to contract. GDP growth of 1.0 percent is expected for 2024, with a subsequent increase of 2.8 percent in 2025. High interest rates are weighing on Victoria’s economy, negatively influencing hiring activity by firms and contributing to decelerating employment growth.
In addition, the city’s unemployment rate is expected to reach a three-year high in 2024. GDP is forecast to rise 1.0 percent in 2024 and 2.6 percent in 2025. In addition to the high-interest rate environment, slow growth in Regina’s household and disposable income per capita will cause consumers to scale back on spending.
Real GDP is expected to reduce in the wholesale and retail sectors as a result; however, spending is anticipated to pick up again in 2025. GDP growth will slow to 1.0 percent in 2024 before increasing to 2.6 percent in 2025. Vancouver’s robust price gains and high-interest rates, which have reached a 15-year peak, are slowing the city’s economic growth, with GDP growth forecast to drop to 0.9 percent in 2024. As inflation continues to ease and with interest rates anticipated to go down in the latter half of 2024, GDP growth for 2025 is projected to rebound by 3.1 percent.
The manufacturing sector will be a significant drag on Halifax’s economy with weakening demand, both locally and internationally, holding back the sector’s output. In 2024, GDP for the city is expected to grow by 0.8 percent but will increase by 2.6 percent in 2025. Stalled growth in real output from Winnipeg’s goods and services sectors is expected this year, alongside stagnant real output from the finance, insurance, and real estate sectors. Economic growth is forecast to stall in 2024, with GDP increasing 0.6 percent before gaining momentum in 2025 and increasing 2.6 percent.
In 2024 Quebec City’s finance, insurance, and real estate sectors are expected to stagnate, a consequence of the projected weak performance of its housing market throughout the coming months. However, as consumers face a higher cost of living, cooling wage growth, and weak employment growth, the retail sector and other consumer-related industries are set to feel the effects. GDP is expected to increase by just 0.5 percent in 2024 before growing by 2.6 percent in 2025.
Elevated interest rates will continue well into 2024, exerting downward pressure on growth prospects for Toronto consumers and businesses. The erosion of consumer purchasing power will continue to put pressure on household budgets and constrain discretionary spending. The city is forecasted to see GDP growth of just 0.5 percent in 2024 before expanding 3.0 percent in 2025, due to rebounding consumer and business demand. In addition to a slight contraction in the Ottawa-Gatineau region’s public sector, high-interest rates and lingering inflationary pressures are projected to limit GDP growth to just 0.4 percent in 2024 before increasing by 2.3 percent in 2025.
As Montreal contends with higher interest rates, the city’s slowing economic activity will persist, with GDP growth forecasted to be just 0.4 percent in 2024. Relatively weak population gains are also expected to limit the city’s economic growth, but GDP is projected to expand by 2.2 percent in 2025.
