A new report from Desjardins economists says population gains have supported growth in each Canadian province this year – while warning that a downturn still could occur in 2024. 

Desjardins released its report on provincial outlooks on Tuesday, which revised growth expectations higher in both Ontario and British Columbia after rebounds in each respective market. The economists behind the report noted that oil-producing regions are expected to perform better relative to non-oil-producing provinces, including B.C. and Ontario, throughout the year and into 2024.

Marc Desormeaux, a principal economist at Desjardins and one of the authors of the report, said in an interview with BNN Bloomberg Tuesday that there are three main takeaways from the findings.

“The first is that in this environment of a slowing Canadian economy, we think that the commodity-producing provinces will fare the best in terms of economic growth,” he said. “The second thing is that we've revised our projections significantly higher for Ontario and B.C., in large part because of the strength of the housing market to begin 2023.”

Thirdly, Desormeaux said “very, very strong” population growth is “supporting economic growth across Canada.”

The report also stated that amid labour shortages, “skyrocketing population growth has supported the economic expansion in all provinces so far this year.” Despite that countrywide expansion, the authors noted that all regions should feel the impact of higher interest rates over the next few months. 

“In our view, while these developments help the 2023 growth arithmetic, they delay the downturn rather than preclude it,” the report said.

“Monetary policy works with a lag, and all regions should increasingly feel the dampening impacts of sharply higher interest rates in the coming months.” 

Retail sales in Ontario and B.C. have fallen behind other regions, the report’s authors said, adding that the largest real estate markets in both provinces have “retreated in June” following another interest rate hike from the Bank of Canada. 

“As we approach 2024, housing‑exposed provinces should see the more significant slowdowns we’ve long been expecting,” the report said. 

By contrast, Alberta and Saskatchewan “remain less vulnerable” and stand to benefit from commodity prices and increased production, the report said. 

The report also noted that net international immigration trends should continue, assuming federal policy continues to focus on attracting newcomers and that immigration has benefited provincial growth across the country in 2023.

“Persistently strong population growth will play a role in stimulating demand for goods and services,” the report said. 

Immigration figures will also impact growth on a provincial basis, the report said, as Ontario and B.C. are experiencing record numbers of new non-permanent residents. However, this trend could change if admissions for temporary foreign workers decline due to an economic slowdown.