Forecast predicts Manitoba’s real GDP will increase 0.4 per cent this year

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Manitoba’s economy will nearly stagnate this year, a Canadian financial institution predicts.

Even so, it’s poised to do better than most of the nation, Desjardins outlined in a new report Tuesday.

“This year, I think, will be a challenging one,” said Marc Desormeaux, principal economist of Canadian economics at Desjardins.

The organization believes Manitoba’s real gross domestic product will increase 0.4 per cent in 2024, matching a recent projection from Deloitte.

Canada could see a mere 0.2 per cent growth in its real GDP, Desjardins outlines.

“In a sense, the economy is not growing at all, in most places,” noted Philippe Cyrenne, an economics professor at the University of Winnipeg.

Ontario and British Columbia will see negative GDP growth, if predictions by Desjardins are correct.

Economists point to higher interest and inflation rates.

“It’s really about the provincial economies increasingly feeling the accumulated weight of interest rate hikes that have already happened,” Desormeaux stated. “We haven’t felt the full impact of those yet.”

The Bank of Canada raised its key policy rate 4.75 percentage points, to five per cent, since March of 2022 in a bid to tame inflation. It’s scheduled to update the rate on Wednesday.

Manitoba will, as a whole, see more economic growth than the norm because of its relatively affordable housing and diversified economy — it’s not as reliant on sectors heavily affected by interest rates as other provinces, like British Columbia, the report highlighted.

Planned investments in mining and manufacturing should help Manitoba, the report continued.

“We’re pretty excited about the coming year,” stated Michael Woelcke, chief executive of Arctic Gateway Group.

Despite inflation, the organization — which operates the Hudson Bay Railway and the Port of Churchill — expects to spend “multiple millions of dollars” this summer on stabilizing rail infrastructure.

It’s slated a trial shipment of 20,000 tonnes of zinc concentrate Snow Lake to Churchill this year.

“We’re optimistic about the critical minerals sector,” Woelcke said, adding he believes this shipment is just the beginning.

The Mining Association of Manitoba unveiled a million-dollar marketing campaign earlier this month to spread awareness about the industry.

Green energy is another sector “well poised” to make money for Manitoba, Woelcke noted. Arctic Gateway Group is talking with companies about using its route to transport material for hydrogen production facility builds.

Fletcher Baragar, a University of Manitoba economics professor, thinks Manitoba’s economy could grow more than Desjardins projects.

The Manitoba Bureau of Statistics anticipates real GDP growth of 0.6 per cent. Baragar believes GDP growth could surpass that statistic too, if several factors come together.

Manitoba needs enough moisture for a normal crop year and regular hydro production. The province’s upcoming budget could create economic spin-offs, including more public sector and construction jobs, Baragar said.

Further, the economy will grow if interest rates lessen in 2024, Baragar continued.

“There’s still strong demand for housing in Manitoba, and there seems to be discussion on the part of all levels of government to try to address that,” he said. “I see these points of light that I think are somewhat encouraging.”

Still, Canada is “teetering on the edge of a recession,” Cyrenne underscored.

High interest rates and inflation will keep many consumers and businesses from spending, he added.

Income growth is “relatively modest” in the private sector, he continued.

Manitoba had the lowest unemployment rate in Canada last December.

Desjardins predicts employment growth of 1.3 per cent in Manitoba and an unemployment rate of 5.9 per cent this year.

It expects Manitoba’s inflation rate — a forecasted 1.9 per cent — to fall below the national average of 2.5 per cent.

gabrielle.piche@winnipegfreepress.com