Prairies will lead economy in 2022

June 28, 2022



Saskatchewan will lead Canadian provinces in economic growth in 2022, with Alberta and Manitoba ranked No. 2 and No. 3, according to a June 7 provincial forecast from economists at RBC Royal Bank.
The forecast also notes two former powerhouses—Ontario and British Columbia—are hampered by a slowing residential market.
RBC projects growth will be strongest in Saskatchewan (up 6 per cent), Alberta (up 5.7 per cent), and Manitoba (up 4.8 per cent) compared to 2021.
British Columbia will fall “to the middle of the pack,” economists Robert Hogue and Carrie Freestone said in their report, due to a decline in the housing market.
Strong global demand and prices for commodities are significantly boosting Prairie prospects, the report states. Saskatchewan stands to report a huge rebound in agricultural production in 2022, following an exceptionally low level in 2021.
“We expect stronger agricultural production will also drive up overall economic growth in Manitoba and Alberta,” the economists noted.
“The massive upswing in global energy markets is further benefiting Alberta’s economy. While crude production to date in the province is largely in-line with year-ago levels, the value of energy exports is up 50 per cent due to higher prices.”
As of June 22, the price of West Texas Intermediate (WTI) crude, an industry standard, was at US $117 per barrel—highest level since September 2008.
But RBC cautions that British Columbia’s reliance on the residential industry leaves it exposed this year. The bank is forecasting B.C. economy will expand 4.2 per cent in 2022—down from 2021’s 5.9 per cent growth—and will be even with Canada’s projected growth.
“We expect rising interest rates will further moderate home resale activity in the period ahead and broaden the cooling effect to other regions. Rapidly deteriorating affordability – especially in Canada’s most expensive markets – will make it increasingly difficult to sustain recent property values,” RBC economists noted.
“In fact, we believe home prices have already reached a tipping point in several markets in Ontario and British Columbia. Slower activity will tamp down the substantial contribution the housing sector made to economic growth during the pandemic.”