A new report from the Conference Board of Canada has found the Ottawa-Gatineau region had one of the lowest GDP growth rates of any metropolitan area in the country in 2013, a trend that is forecast to continue for the next year.
According to the think tank’s Metropolitan Outlook for Winter 2014, which compared economic growth in 28 census metropolitan areas, Ottawa’s economy grew by 0.3 per cent in 2013, as public sector employment “fell by its fastest rate on record.”
That’s well below the Canadian average of 1.8 per cent.
In fact, only Victoria and Trois-Rivières – which saw their economies shrink during the year – performed worse.
Cuts to the public sector, which the report says accounts for 30 per cent of the region’s economic activity, were the main reason for the sluggish growth rate. The Conference Board predicts that a total of 14,300 jobs will be lost when the numbers are tallied from 2013 and 2014, with most of those taking place in 2013.
Fewer cuts next year will mean a slight boost to the region’s economy. The Conference Board is forecasting a growth rate of 1.4 per cent in 2014.
But that still leaves the region at the bottom of the charts. Only Saguenay and Trois-Rivières are expected to underpreform Ottawa.
The Board warns that there could be more public sector job cuts if the federal budget is not balanced by 2015, which would have a negative effect on the forecast growth rate.
The shrinking public sector has pushed down housing starts, which the report says “fell by an estimated 6.7 per cent to 8,200 units last year.” Coupled with slowing population growth in the region, housing starts are forecast to decline “by 14.4 per cent to 7,000 units this year” in 2014.
However, some major non-residential construction projects, the light-rail transit expansion, the redevelopment of Lansdowne Park and two major commercial developments in Kanata should push the overall construction output up by 0.6 per cent.
While the region’s high-tech manufacturing sector is continuing to shrink – it fell an estimated 10.2 per cent in 2013, the report said – information and communications technology services has grown by an average of 2.6 per cent since 2011.
This is supposed to continue, as the ICT services sector is expected to grow by 2.5 per cent in 2014.
It currently employs about 45,400 people, the report said.
The Conference Board is predicting stronger growth in 2015 though, forecasting that Ottawa-Gatineau’s economy will grow by 2.2 per cent. That would put the region slightly above the Canadian average.
Across Canada, the Conference Board predicts that Calgary, Regina, Edmonton and Saskatoon will have the strongest economic growth rates in 2014.
In 2013, Saskatoon, St. John’s, Regina and Edmonton had the highest growth rates.