Interest rates are continuing to rise and even though inflation is expected to slow in the fourth quarter the Conference Board of Canada believes the risk of recession is still pretty high.
But in its Provincial Three-Year Outlook report released Thursday — called Turbulence Ahead — it is forecasting annual growth rates across the provinces despite the fact the country as a whole is in for a few quarters of effectively zero growth.
With commodity prices still strong — at least partly because of the war in Ukraine — the Ottawa think tank is forecasting that Manitoba will produce GPD growth above the national average this year and next.
Its forecast for Manitoba is for it to grow 3.7 per cent this year, spearheaded by the agricultural sector, followed by a more modest 1.8 per cent growth in 2023 and back up to 2.4 per cent in 2024.
Last year, Manitoba’s 1.2 per cent growth was significantly below that national rate of 4.9 per cent.
Richard Forbes, a senior economist at the Conference Board, said the risk of recession has gotten a little bit higher since a few months ago.
“From our view there are some things to worry about on the consumer side because inflation has remained really high and the purchasing power of households is eroding really quickly which is dampening our outlook for the nation as a whole.”
He said the organization is in the process of updating its national forecast right now and it has not fully decided yet on how to peg its recessionary forecast.
In Manitoba, the recovery of the ag sector, after a serious drought year in 2021, has not only increased farm cash receipts — they were up more than 15 per cent in Manitoba in the third quarter — but has provided a boost to the transportation and warehousing sectors as well.
The downside to the sector’s strong showing this year is that crop production this year is estimated to have fully recovered which means less room for further growth.
Forbes said residential investment in the province spiked to its highest level on record — close to 20 per cent in 2021 — much of the fueled by home renovation.
But with construction material prices rising and labour market challenges the expectation is that there will be a rollback in that sector this year and in the next two years as well.
While the Conference Board expects inflation to cool in the fourth quarter, Forbes noted it is still way above the Bank of Canada’s target of two per cent.
“So it’s important to note that while inflation may be cooling, when it was at a decades-long high, it is not necessarily a great story,” Forbes said.
In addition, he said the numbers that came in for Canada as whole in the third quarter showed “pretty weak growth in investment.
“That is an important driver of growth and it shows that business is worried about a potential recession and so they are cutting back on capital spending a little bit,” he said.
But the Conference Board does flag potential investments in Manitoba like the $400-million Canada Premium Sands investment in a solar glass manufacturing plant in Selkirk and the early stage development at the CentrePort Rail Park, which it believes could materialize over the next couple of decades into a $2.5-billion investment.
Martin Cash
Reporter
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
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