Despite Easing Inflation, Slow Growth is Expected for Canadian Cities for Most of 2024

OTTAWA, Feb. 28, 2024 (GLOBE NEWSWIRE) -- Canadian cities will continue to experience sluggish growth throughout most of 2024, as higher interest rates and constrained consumer spending continue to weigh on the economy; however, a slight rebound is expected in the latter half of the year, according to new research from The Conference Board of Canada.

"The Bank of Canada's aggressive interest rate hikes are helping to curb inflation nationwide, but consumer prices will remain above the central bank's 2.0 per cent target for the first half of 2024," said 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 boost 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 per cent in 2024 before increasing a further 3.2 per cent in 2025.
• With Saskatoon's disposable income per capita projected to plateau in 2024, households are likely to feel pressured to curtail spending over the coming year. Amid this weaker outlook, anticipated improvements in the city's resource sectors offer some optimism. GDP growth is forecast to be just 1.6 per cent in 2024 before increasing a further 2.4 per cent in 2025.
• Despite Edmonton's robust migration-fueled population growth, the recent easing of oil prices signals an impending slowdown in the economy. The city's GDP is expected to grow 1.5 per cent in 2024 before increasing a further 3.4 per cent in 2025.
• Persistent inflation and rising interest rates are dampening 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 per cent is expected for 2024, with a subsequent increase of 2.8 per cent 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 per cent in 2024 and 2.6 per cent in 2025.
• In addition to the high interest rate environment, sluggish growth in Regina's household and disposable income per capita, will cause consumers to scale back on spending. Real GDP is expected to decline 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 per cent in 2024 before increasing 2.6 per cent 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 per cent 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 per cent.
• The manufacturing sector will be a significant drag on Halifax's economy with weakening demand, both domestically and globally, holding back the sector's output. GDP for the city is expected to grow just 0.8 per cent in 2024 but will rise 2.6 per cent 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 sector. Economic growth is forecast to stall in 2024, with GDP increasing 0.6 per cent before gaining momentum in 2025 and increasing 2.6 percent.
• Quebec City's finance, insurance, and real estate sectors are expected to stagnate in 2024, a consequence of the projected weak performance of its housing market throughout the coming months. In addition, as consumers face the 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 just 0.5 per cent in 2024 before growing 2.6 per cent in 2025.
• Elevated interest rates will persist 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 per cent in 2024 before expanding 3.0 per cent 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 per cent in 2024 before increasing by 2.3 per cent 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 per cent 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 per cent in 2025.
  

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