According to new data released today, Canada’s economic expansion decelerated significantly in 2023, growing by just 1.5% compared to more robust gains of 4.2% in 2022 and 6.0% in 2021.
While GDP rose in most provinces and territories, Newfoundland and Labrador (-2.6%) and the Northwest Territories (-0.5%) saw declines in 2023, highlighting regional variations. British Columbia, Saskatchewan, and Alberta led the provincial growth, each posting a 2.3% increase, while Nunavut stood out among the territories with a 3.8% rise. The GDP trends underscore varying economic drivers across the regions, from natural resource dependence to service sector growth.
Canada’s export sector proved resilient, with a 5.0% increase in 2023 that far outpaced the slight 0.3% rise in imports. Exports rose in 10 provinces and territories, buoyed by global demand, while Newfoundland and Labrador, Yukon, and the Northwest Territories saw declines. Newfoundland and Labrador also experienced the largest jump in imports (+7.9%), while declines were observed in Yukon, Quebec, and Alberta.
Household spending grew at a modest 1.8% rate in 2023, down sharply from 2022’s 5.5% surge. This more cautious pace reflects economic uncertainties and higher borrowing costs that have dampened consumer confidence. Spending on services grew by 2.7%, while goods spending edged up only slightly by 0.7%. Newfoundland and Labrador led the country in household spending growth (+3.8%), followed closely by Alberta (+3.3%).
Despite the increase in spending, population growth outpaced household expenditures in nearly all regions, with only Newfoundland and Labrador and Nunavut seeing household spending rise faster than population growth.
Government expenditure on goods and services rose 2.2% in 2023, a slower pace than the previous year’s 3.2% increase. Notably, federal spending declined, while provincial and local government outlays increased. Quebec and Yukon recorded declines in government spending, while British Columbia (+6.9%) and Manitoba (+6.0%) led growth in public expenditure, reflecting regional priorities and budget constraints.
Housing investment continued its downward trend with an 8.5% drop in 2023, following a 10.6% decrease the prior year. Investment in new construction, renovations, and ownership transfer costs all fell across Canada, with Newfoundland and Labrador, Prince Edward Island, and Quebec recording the steepest declines. Nunavut was the only region where housing investment rose, hinting at ongoing construction and demand.
Non-residential business investments, however, painted a mixed picture. Investment in non-residential structures increased by 3.2%, bolstered by higher spending in mining, utilities, and oil and gas, particularly in the Northwest Territories, Nunavut, and Saskatchewan. Meanwhile, spending on machinery and equipment dipped 2.7%, indicating caution in capital investments across most regions, despite notable gains in Newfoundland and Labrador, Yukon, and Saskatchewan.
Employee compensation grew in all provinces and territories, with wages and salaries rising 6.5% nationwide. Sectors such as professional and personal services, health care, and construction led the wage increases, reflecting strong demand in these fields. Yukon saw the highest wage growth (+9.9%), followed by Nova Scotia and Prince Edward Island at 9.4%. Quebec posted the lowest wage growth (+5.2%).
Canada’s gross operating surplus, however, fell by 5.9%, marking a reversal from two years of robust growth. The energy and natural resource sectors, particularly in Newfoundland and Labrador and Alberta, were hit by declining prices, leading to significant declines in these regions. Quebec and Ontario helped mitigate the national drop due to increased surplus in service industries.
Canadian households faced increasing debt burdens in 2023, with the household saving rate dipping to 3.7%, down slightly from 4.0% in 2022. While Nunavut, Yukon, and the Northwest Territories posted high saving rates, Quebec, Ontario, and Alberta dominated the country’s total household savings.
Rising interest rates, a continuation of the trend that began in 2022, sharply increased borrowing costs. The debt service ratio – measuring interest payments as a share of disposable income – reached 9.1%, the highest level since 1995. Households in Ontario and British Columbia bore the highest debt service burdens, each surpassing 10%, underscoring the mounting pressure on consumers amid elevated interest rates.
As we move through 2024, Canada continues to grapple with challenges in housing investment, rising debt burdens, and a slowing economy—issues that have lingered beyond the fluctuations of the pandemic recovery years. As we move through 2024, Canada continues to grapple with challenges in housing investment, rising debt burdens, and a slowing economy—issues that have lingered beyond the fluctuations of the pandemic recovery years. By identifying persistent issues and growth patterns, the 2023 economic data serves as both a reflection on recent challenges and a roadmap for policymakers and businesses to foster stability and address vulnerabilities moving forward.