Reopening after COVID-19 lockdowns and a robust U.S. expansion will help all of Canada's provincial economies rebound strongly in 2021, says Scotiabank Economics in its latest Provincial Economic Outlook.
"COVID-19’s third wave has stalled momentum in many of Canada's provinces," said Marc Desormeaux, senior economist at Scotiabank, "but we still expect all [provinces] to see sharp rebounds in 2021 as they bounce back from COVID-19 lockdowns and benefit from strong U.S. economic growth."
Sharp rebounds expected
Despite Canada’s improved and synchronized vaccination trajectory, severe third pandemic waves—and containment/resilience in some provinces—have led to incremental forecast revisions.
- Stronger commodity values are supporting the economic expansion, not just in oil-rich provinces but also in jurisdictions that produce and export metals, lumber, and agricultural items.
- All provincial budgets revealed a significant financial hit from COVID-19, though federal spending has cushioned the blow; all provinces will use infrastructure spending to bolster their recoveries.
- Across Canada, Scotiabank expects the pace of home sales, price appreciation, and residential investment growth to slow from recent unsustainably high rates, but remain well-supported.
- “High-contact” sectors like tourism and food services continue to struggle and remote work-capable services are leading the recovery; there may eventually be a shift as vaccination efforts advance.
- Several provinces have boosted immigration by granting permanent resident status to work and study permit holders, but national admissions remain below the target level.
