Canada

Deloitte forecasting Manitoba’s growth to mirror the Canadian average

12 months ago
BusinessL

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A general consensus is brewing among economists that the heavy burden of high interest rates has finally succeeded in bringing the Canadian economy to a standstill.

In its latest forecast to be officially released today , called Weathering a Freeze before the Thaw, Deloitte is expecting at least a couple of quarters of negative growth between the fourth quarter of 2023 and the third quarter of 2024.

Dawn Desjardins, chief economist with Deloitte, said irrespective of a technical recession, any actual downturn will be modest.

Deloitte is forecasting Manitoba’s growth to mirror the Canadian average of a 0.4 per cent increase in GDP in 2024. (Andrew Lahodynskyj / The Canadian Press files)

Deloitte is forecasting Manitoba’s growth to mirror the Canadian average of a 0.4 per cent increase in GDP in 2024. (Andrew Lahodynskyj / The Canadian Press files)

“There are risks either way,” she said in an interview with the Free Press. “Maybe there won’t be two back-to-back negative quarters. Maybe there will be flat growth. But nonetheless it is a stagnant story for the economy. It doesn’t have to have the label of ‘recession’ but it will be pretty slow.”

As is often the case, Deloitte is forecasting Manitoba’s growth to mirror the Canadian average of a 0.4 per cent increase in GDP in 2024.

While she notes the moderating effects of Manitoba’s diversified economy especially at times like these, she does remind that Manitoba is not immune to the monetary dynamics of the day.

“The interest rate environment is catching up to everyone and Manitoba is no different than other provinces,” she said. “The household debt-to-income ratio is elevated as it is everywhere. As we now go through this period of renewals for households with mortgages, of course that’s going to be tough.”

She notes there has been no mass layoffs like there might be in more traditional recessions and last week’s Statistics Canada Labour Force report showed that Manitoba had the lowest unemployment rate in the country in December while the employment rate held even across the country.

But Canadian Manufactures and Exporters has warned recently that its members order books were not looking great in Manitoba and Desjardins said there are “potential difficulties for Manitoba’s manufacturing sector.”

The trend line Deloitte and some of the bank forecasters are sketching is for slow — if not negative growth — for the first half of the year across the country with a strong recovery quarter to quarter after that and throughout 2025.

Desjardins said Manitoba’s low unemployment and consistent population growth will be mitigating factors for the economy in this province.

“We are all going to have pay more to service our debts, but having said that it’s helpful that labour markets are remaining firm in Manitoba,” she said.

Desjardins believes commercial and multi-family construction activity will go some way to dampen the impacts of manufacturing softening.

As well, she said commodity prices — which have been impacted by geo-political issues and will likely continue to be — have been impacted by a period of slower demand globally.

“It has really been such a volatile environment, globally, for all commodity prices. There so many geopolitical factors at play,” she said. “As we go through 2024 if there is a soft start and then economic activity picks up as we expect, it won’t just be a made-in-Canada situation. We could see momentum growing in other countries as well. So net-net we do see commodity prices hanging in.”