Desjardins Provincial Outlook: The Early Innings of Rate Relief

Although expectations of additional interest rate reductions underpin our forecast of stronger economic growth in 2025, the recovery is still in its early days. We remain convinced that growth will soften in most provinces during the quarters ahead, and a fuller rebound will only come closer to 2025 once more cuts have been made.

We still expect interest-rate-sensitive provinces like Ontario and BC to feel the biggest pinch for the rest of 2024 before beginning relatively strong rebounds in 2025.

By contrast, the oil-producing provinces will continue to benefit from rising commodity output and comparatively low household debt.

For all provinces, the recently released Statistics Canada demographic projections reinforce our long-held view that Ottawa’s planned reduction in the non-permanent resident (NPR) population will weigh down economic growth. This could reasonably be expected to hit hardest in Ontario and BC, where population growth has been most reliant on NPRs.