Economic commentary provided by Alberta Central Chief Economist Charles St-Arnaud.
Bottom line
The release of the national accounts for the provinces shows that Canadian economic activity was revised higher for 2023 and that growth was robust for most provinces, except for a contraction in Newfoundland. The details show that net exports and the continued increase in domestic demand mainly supported growth.
However, the details also show that strong population growth was a significant driver of domestic demand. As such, every province saw a decline in their GDP per capita in 2023. Moreover, consumer spending per capita declined in many provinces, especially in the Western part of the country. This situation was already highlighted in retail sales, and a higher proportion of households are facing financial stress, as suggested by bigger increases in insolvencies in these provinces.
Overall, the release does not provide much new information on the Canadian economy and will have little impact on our views going into 2025. However, it offers more colour and nuances at the provincial level.
For Alberta, the details for 2023 show strong growth of 2.3%, the third fastest growing province and higher than initially published in the GDP by industry. However, the robust headline growth masks some underlying weaknesses, with population growth significantly supporting the economic expansion. As such, GDP per capita in the province declined by 1.5% in 2023, the third biggest decline amongst provinces, and reached its lowest level since 2016, if the pandemic is excluded, and a level slightly lower than in 2011. In addition, due to the decline in commodity prices, nominal GDP dropped by 4.3%.
Economic activity increased in every province in 2023, except in Newfoundland, for a national rise of 1.5%. Growth was the strongest in BC (+2.4%), Alberta (+2.3%), Alberta (+2.3%), and PEI (+2.2%). On the flip side, growth was the weakest in Newfoundland (-2.6%), Quebec (+0.6%), New Brunswick (+1.6%), Ontario (+1.7%), and Manitoba (+1.7%). In all cases, growth in 2023 slowed significantly after economic activity in 2022 was boosted by the post-pandemic recovery and reopening of the economy.
However, strong population growth was a significant support to growth in 2023. As such, note that GDP per capita declined in every province, led by Newfoundland (-4.0%), PEI (-1.6%), Alberta (-1.5%), and Ontario (-1.4%). It declined the least in Saskatchewan (-0.3%), BC (-0.8%), Nova Scotia (-1.0%), and New Brunswick (-1.2%).
GDP per capita remains the highest in Alberta ($76,158), followed by Saskatchewan ($68,721), BC ($60,218), and Ontario ($59,703). It is the lowest in Nova Scotia ($46,237), PEI ($46,410), New Brunswick ($46,427) and Manitoba ($52,081).
Looking at the source of growth, most provinces have seen net exports as the main contributor to growth in 2023, except in Newfoundland. Similarly, final domestic demand was also positive in all provinces, while inventories were a drag on growth across Canada.
Focusing on domestic demand, household spending increased the most in Newfoundland (contributing 1.9 percentage points (pp) to growth), PEI (contributing 1.9pp), Nova Scotia (contributing 1.8pp), and New Brunswick (contributing 1.8pp). The rose the least in Saskatchewan (contributing 0.4pp), Ontario (contributing 0.9pp), Quebec (contributing 1.0pp), and BC (contributing 1.0pp).
Strong population growth also played a significant role in supporting household spending. As such, note that spending per capita declined in every province except in Newfoundland (+2.3%). The biggest declines were in BC (-1.7%), Ontario (-1.7%), Saskatchewan (-1.6%), and Manitoba (-1.3%). They decrease the least in New Brunswick (-0.1%), Quebec (-0.3%), Nova Scotia (-0.5%), and Alberta (-0.5%).
Residential investment was a drag to growth in every province, led by PEI (subtracting 1.6pp), Quebec (subtracting 1.3pp), Nova Scotia (subtracting 0.9pp), Newfoundland (subtracting 0.8pp), and BC (subtracting 0.8pp). The drag was the smallest in Alberta (subtracting 0.2pp), Saskatchewan (subtracting 0.3pp), Manitoba (subtracting 0.6pp), and New Brunswick (subtracting 0.6pp).
Business investment, which includes investment in non-residential structures, machinery and equipment, and intellectual property, was mixed. It made the biggest positive contribution to growth in Newfoundland (+2.0pp), Saskatchewan (+1.4pp), and BC (+0.4pp), while it was a drag to growth in Alberta (-0.6pp), PEI (-0.4pp), New Brunswick (-0.4pp), and Manitoba (-0.2pp).
Government expenditures supported growth in every province, except in Quebec (reducing growth by 0.1pp). The biggest positive contributions to growth were in BC (+2.1pp), Manitoba (+1.9pp), and PEI (+1.2pp).
Net exports positively contributed to growth, except in Newfoundland (subtracting 6.0pp). The external sector supported growth the most in Saskatchewan (+5.2pp), Quebec (+2.3pp), Alberta (+1.9pp), and Ontario (+1.8pp).
Looking at the details, exports were a drag to growth only in Newfoundland (subtracting 2.0pp), while the biggest contribution to growth was in Saskatchewan (+6.8pp), New Brunswick (+4.3pp), Nova Scotia (+2.6pp), and Ontario (+2.2p). It was the smallest in BC (+0.5pp), Alberta (+1.8pp), Quebec (+1.9pp), and PEI (+2.0pp).
On the imports side, higher imports were a drag to growth in all provinces, except in Quebec (adding 0.4pp) and Alberta (adding 0.1pp) where a decline in imports supported growth. The biggest drag from exports were in Newfoundland (-4.0pp), New Brunswick (-3.2pp), Nova Scotia (-2.5pp), and Saskatchewan (-1.5pp).
Investment in inventories was a drag to growth is most provinces, except in PEI (adding 0.2pp) and Nova Scotia (adding 0.2%). The biggest reduction in growth due to inventories were in Saskatchewan (-5.2pp), Manitoba (-1.7pp), Quebec (-1.4pp), New Brunswick (-0.9pp), and Alberta (-0.9pp).
Nominal GDP rose in most provinces, except in Newfoundland (-5.5%), Saskatchewan (-4.8%) and Alberta (-4.3%), where it declined due to lower commodity prices, especially energy. Nominal GDP increased the most in Nova Scotia (+8.0%), Ontario (+5.4%), Quebec (+5.0%), and PEI (+4.9%).
Looking at the income side, household disposable income increased in all provinces, supported by robust increases in the compensation of employees. Disposable income increased the most in Nova Scotia (+9.2%), PEI (+8.1%), Manitoba (+8.0%), and BC (+7.4%), while it rose the least in Saskatchewan (+0.3%), Quebec (+4.0%), Ontario (+4.8%), and Alberta (+5.9%).
Once adjusted for population growth, household disposable income per capita rose in all provinces except Saskatchewan, which declined (-2.3%). It increased the most in Nova Scotia (+6.0%), Newfoundland (+5.5%), Manitoba (+4.8%), PEI (+4.0%), and BC (+4.0%). It rose the least in Ontario (+1.6%), Quebec (+2.0%), and Alberta (+2.0).
Disposable income per capita remains the highest in Alberta ($44,963), followed by BC ($43,115), Saskatchewan ($40,541), and Ontario ($39,273). It is the lowest in Manitoba ($35,581), New Brunswick ($35,744), Nova Scotia ($36,030), and Quebec ($36,531).
With household spending increasing faster than income in many provinces, the household saving rate eased in most provinces, except in PEI, Nova Scotia, Manitoba and BC. The saving rate is the highest in Alberta (8.8%), Quebec (7.8%), and Saskatchewan (7.4%), while it is negative in Nova Scotia (-3.7%) and New Brunswick (-1.6%) and the lowest in Newfoundland (0.2%) and BC (0.6%).
Net operating surpluses, a measure of profits, were lower in most provinces as a result of lower commodity prices. The biggest declines were in Newfoundland (-21.1%), Alberta (-16.0%), Saskatchewan (-13.4%), and BC (-8.8%). They rose in Quebec (+4.3%), Ontario (+0.9%), PEI (+0.8%), and Manitoba (+0.3%).
Alberta
Growth in Alberta was 2.3% in 2023, after 6.0% in 2022, and amongst the fastest-growing provinces. This is stronger than the 1.5% released earlier this year. The details show that most of the growth came from net exports (contributing 1.9pp), household spending (contributing 1.3pp), and government spending (contributing 0.8pp). On the flip side, growth was held back by a decline in inventories (subtracting 0.9pp), business investment (subtracting 0.6pp), and residential investment (subtracting 0.2pp). The increase in net exports was mainly the result of strong exports (contributing 1.9pp), while a decline in imports added to growth (+0.1pp). However, while real growth remained robust, nominal growth declined by 4.3% due to lower commodity prices, with WTI oil prices having dropped by almost 20% in 2023 compared to 2022. This has impacted the province’s net operating surpluses, which declined by 16% in 2023.
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Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.