With global economic prospects dimming, TD Economics is cutting its provincial forecasts for 2022.
In a new report, the bank’s economists downgraded their GDP growth calls for most provinces by between 0.1 and 0.9 percentage points, citing the negative impacts of inflation and rising interest rates on both household and business spending throughout the country.
“The good news is that most regional economies appear to have entered the summer in solid form, leaving a cushion to absorb these shocks,” the report said.
The Atlantic provinces face the greatest impact from inflation, given the higher share of food and energy in household budgets in the region, it noted — whereas Ontario and Quebec are most affected by rising interest rates.
The Prairie provinces and British Columbia are best positioned, the report indicated, as the benefit of higher commodity prices help offset, “the financial headwinds on households in those regions,” it said.
Alberta is seen leading the way this year with real GDP growth projected at 5.5%, followed by Saskatchewan (4.9%) and B.C. (3.6%).
On the other end of the spectrum, Newfoundland and Labrador is forecast to see just 1.4% growth, with Nova Scotia at 1.9% and New Brunswick at 2.0%.
The report also noted that housing markets are expected to weaken across the country this year.
“Home sales are down across nearly all provinces since February, while average home prices have dropped in Alberta, B.C. and especially Ontario,” it said. “We believe that there is further downside left for markets as rates climb, and are forecasting continued declines in home sales and prices through the remainder of the year.”