Ontario is the only province where RBC expects the economy to actually shrink in the coming year, forecasting a 0.1 per cent decline in real GDP for 2023.
Ontario manufacturers have been hit by global supply chain disruptions over the past few years, but demand hasn’t been a problem, said RBC. Now with a slowdown impacting markets here and aboard, the economists see demand waning and manufacturing activity slowing in the year ahead. Quebec’s economy was already showing signs of slowing late last year. The solid increases manufacturers enjoyed earlier in the pandemic when demand was high are slipping, and RBC expects that will broaden to the services sector this year as Quebecers tighten their belts.
Much is down to a stronger energy sector. RBC expects oil prices will be 54 per cent above pre-pandemic levels in 2023; drilling activity is expected to continue to rise; and the completion of the Trans Mountain pipeline expansion could expand exports. Investment in decarbonization is also on the rise. Work on Canada’s largest solar farm is almost done in Alberta’s Sun Belt, and smaller projects are starting, the economists said.