- Banking on Main Street combines expertise of BMO Economics
with BMO bankers' insights on business conditions
TORONTO, Oct. 20,
2022 /CNW/ - Despite the Canadian economy
slowing, and a possible downturn into 2023, many of Canada's businesses have put the worst of the
COVID-19 pandemic period behind them and have an opportunity to
bring innovation to the fore to continue their success, according
to this year's Banking on Main Street from BMO Economics and
BMO Business Banking.
The annual publication combines the expertise of BMO Economics
with the insights of BMO's business bankers. It features a national
economic report for Canada and province-by-province
outlooks.
"Stubborn inflation readings will force further tightening by
the Bank of Canada through the
remainder of 2022, and the combination will likely dent consumer
spending, housing and business confidence," said Doug Porter, Chief Economist, BMO. "Real GDP
growth is expected to slow to zero next year after 3.2% growth in
2022, with risk of a downturn most acute around the turn of the
year."
"As we have moved through 2022, our business clients have been
navigating uncertainty, but for many businesses, the worst is
behind them. We're clearly in a new way of working, and those
businesses that have committed to exceptional service and quality
products, along with innovation and intelligent expenditure
management, tend to outperform in the market," said Mike Bonner, Head of Canadian Business Banking,
BMO. "Considering the current environment, characterized by rising
inflation, higher interest rates and tight labour markets, it has
never been more important for business owners to actively review
their operations, assess the competitive landscape and consumer
trends, and take action to evolve."
Provincial forecasts at a glance:
Western
Canada:
- British Columbia is expected
to grow 3.0% this year, slightly below the national average, but a
dip into negative territory is likely in 2023. The weakness follows
a strong outperformance coming out of the worst of the pandemic in
2021, when the province grew by more than 6%. BC businesses are
moving into a new normal of higher inflation and growing borrowing
costs with concern, but cautious optimism.
- The Alberta economy is
expected to outperform the country with 4.3% growth this year and
hold up relatively well as the slowdown grips most of Canada into 2023. Meanwhile, businesses say
that Alberta is back – confidence
has returned in a broad array of sectors.
Prairies:
- The Saskatchewan economy will
likely grow a strong 5.5% this year, leading the country after
underperforming in seven of the past eight years. The resource
sector represents a vital area of good news; energy prices have
risen, providing benefits for the oil and gas industry in the south
of the province. Agriculture is also poised to rebound after very
challenging conditions in 2021 cut output. The resource sector has
regained strength alongside higher oil and potash prices.
- Manitoba is expected to grow
4.0% this year, ahead of the national increase. Challenging crop
conditions weighed heavily last year, but those look much improved
for 2022. It's clear that post-pandemic demand has arrived as
advertised, which benefits the province. Entrepreneurial activity
is starting to pick up – on the back of a strong underlying
infrastructure – and points to longer-term optimism in the
province.
Central
Canada:
- Ontario's economic growth is
expected to slow to 2.9% this year, below the national average as
higher interest rates and a housing correction bite hard.
Throughout the province, businesses are returning to pre-COVID
activity levels, with some sectors experiencing the return faster
than others. That said, the province faces challenges with supply
chains, labour and rising costs.
- Many GTA businesses are challenged by supply chain challenges,
labour shortages, rising interest rates and inflation. Business
owners are turning to their cash reserves or personal resources to
fund working capital, to offset higher borrowing costs.
- Quebec is on track for solid
3.4% growth this year, ahead of the national average. That comes in
part thanks to a strong performance around the start of the year,
and a less severe early decline in housing activity. Since the
beginning of the year, interest rates and the looming possibility
of a recession are the new areas of concerns for Quebec entrepreneurs. Combined with the
shortage of qualified workers, supply chain issues and increased
costs, uncertainty prevails.
Atlantic
Canada:
- The New Brunswick economy is
expected to grow 1.8% this year, softer than the national average;
that said, the pandemic contraction was also much milder than most
other regions, so there has been less ground to make up. As one of
the country's most important hubs, transportation has been an
historic strength for New
Brunswick. The industry continued to do well throughout the
pandemic and the reopening of economies across the country will
lead to even further activity. Players in this space can feel
optimistic.
- Nova Scotia is expected to
grow 1.6% this year, cooling from a strong 5.8% surge last year,
with the impact of Hurricane Fiona weighing, but still uncertain.
Key sectors have showed strength for businesses, particularly
tourism with some record passenger totals at Halifax's airport in the summer.
- The PEI economy will likely expand 1.5% this year, weighed down
by the impact of Hurricane Fiona. Rebuilding efforts should boost
activity next year and, while the impact is still uncertain, 1.3%
growth is expected. PEI businesses are seeing a mixed situation,
with some industries affected more than others by the current
broader situation with inflation, interest rates and supply chains.
On the positive side, PEI is benefiting from a resurgence in
tourism.
- Newfoundland & Labrador
can expect to see little real GDP growth this year given some
outages in the energy sector and the impact of Hurricane Fiona.
However, incomes are getting a boost from surging oil prices, and
rebuilding efforts will add to activity into 2023. With the
reopening of economies across the country but more Canadians
choosing to stay in country for their vacations, the province is
receiving more travelers from across the country.
To view the full report,
visit: https://economics.bmo.com/en/publications/detail/dd91360f-01ce-4e12-8429-373ae2b7a870/
About BMO Financial
Group
Serving customers for 200 years and counting, BMO is a highly
diversified financial services provider - the 8th largest bank, by
assets, in North America. With
total assets of $1.07 trillion as of
July 31, 2022, and a team of diverse
and highly engaged employees, BMO provides a broad range of
personal and commercial banking, wealth management and investment
banking products and services to more than 12 million customers and
conducts business through three operating groups: Personal and
Commercial Banking, BMO Wealth Management and BMO Capital
Markets.
Internet: www.bmo.com
Twitter: @BMOMedia
SOURCE BMO Financial Group