Research Briefing | Sep 29, 2023

Largest Canadian metros appear more resilient to the recession

The year ahead will be tough for Canadian metros, with a range of pressures imposed upon them. However, there are glimmers of light, and we expect GDP to rise in six of the 10 major metros. Calgary is expected to grow the fastest, while Montreal will outperform both Vancouver and Toronto. The latter is set to see GDP decline, amid weaking activity in its finance & real estate sector. In general, smaller metros will underperform their larger counterparts.

What you will learn:

  • We expect Canada to have entered a short recession by Q3, lasting into the first half of 2024. The largest 10 Canadian metros will ride the downturn more successfully than most of the other 25, despite seeing only very modest GDP rises. The relative strength of the labour markets in Canada’s largest metros gives them an advantage.
  • Of the 10 largest metros, Calgary is set to grow the fastest in 2024, but only by a modest 1.4%. The dominant sector here, extraction, is set to contribute the most to GDP growth, but will still expand at its slowest pace since the pandemic.
  • Vancouver is among a few metros where we expect positive employment growth in 2024, but a GDP decline. This largely reflects its exposure to finance & real estate activity, with home sales and prices due to resume declining. This sector represents nearly 30% of Vancouver’s GDP, but less than 10% of employment, leaving the labour market in better shape. Of the three largest metros, Montreal has the most favourable industry mix for 2024, helping it to reverse its recent underperformance, and grow faster than both Vancouver and Toronto in the short term.
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