Atlantic Canada’s economic growth to slow in 2025 as recent population gains subside
HALIFAX (October 31, 2024) – Two major factors will shape the regional economy in 2025. Slower population growth will moderate the pace of economic activity, despite declining interest rates stimulating spending, according to the Atlantic Economic Council’s annual ATLΛNTIC Economic Outlook, released today. We forecast real GDP growth in each Maritime province will slow in 2025 while Newfoundland and Labrador’s will see an increase due to higher oil output.
Atlantic population growth will slow further in 2025, mainly due to federal policy changes. This includes a reduction in the number of temporary foreign workers and new international students in the country as well as a lower immigration target. These changes will ease pressure on the housing market, especially in the rental sector, but will create challenges for some employers and post-secondary institutions.
“Housing starts in the region were up 40% year-to-date in September.” says Patrick Brannon, Senior Researcher with the Council. “Increased housing starts, along with slowing population growth, will help limit further strains on housing markets.”
Employment in Atlantic Canada grew 3.4% year-to-date in September, adding 34,000 new jobs. The Council expects regional employment growth to slow to less than 2% in 2025.
Job vacancy rates have fallen to pre-pandemic levels, except in the construction and health care industries, due to strong gains in the supply of labour.
“Labour force shortages will likely re-emerge with fewer non-permanent residents” says Brannon. “Continued in-migration is needed in Atlantic Canada to replace the retirement of older workers.”
Inflationary pressures are expected to remain low over the next several months. The Council expects the Bank of Canada to reduce the overnight interest rate to 2.25% by the end of 2025. Lower interest rates will help those with high debt and encourage new spending by consumers and businesses.
We forecast Atlantic major project investment to increase 15% in 2025, led by surging spending on renewable energy projects. However, investments to improve competitiveness will be crucial to support economic growth as population enters a lower growth phase.
Newfoundland & Labrador
Rising oil production will offset an otherwise slowing economy in 2025
- The economy is forecast to grow 2.6% in 2024, led by strong gains in employment and consumer spending.
- An increase in oil production will boost real GDP growth to 2.9% in 2025, but the rest of the economy will slow.
Prince Edward Island
The pace of economic activity will ease due to slower population growth
- Real GDP growth will decelerate to 2.3% in 2025 from 3.0% this year.
- A further increase in residential construction is expected next year to help house the Island’s growing population.
Nova Scotia
Lower population gains will moderate economic growth
- Nova Scotia’s real GDP will grow 1.9% in 2024 before slowing to 1.6% in 2025.
- Major project spending in Nova Scotia is forecast to increase 28% next year to a record $8.5 billion.
New Brunswick
Weak export performance limits growth in 2024, even more in 2025
- We expect a 1.5% increase in New Brunswick’s real GDP this year. This will slow slightly to 1.3% in 2025.
- Exports are and are worsen next year as the US economy slows.
To receive a copy of this publication or schedule an interview, please contact:
Atlas Embercrest
Communications & Events Assistant
Email:
atlas@atlanticeconomiccouncil.ca
Mobile:
902-536-3616
