Robust construction activity, an expanding federal government and an influx of visitors attending Canada’s 150th anniversary celebrations will help Ottawa-Gatineau’s economy expand at its fastest pace in seven years in 2017, the Conference Board of Canada said Monday.
The think tank projects local real GDP growth will be 2.2 per cent next year. That would be the highest rate since 2010, when the economy expanded 2.9 per cent.
Economic growth this year is forecast to be 1.7 per cent.
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The National Capital Region is emerging from “a period of tepid growth” that ran from 2012-14 as federal layoffs limited economic growth to an average of 0.5 per cent annually, the Conference Board said in its autumn metropolitan outlook report.
However, the local economy started to gain momentum last year as sluggishness in public administration was more than offset by construction projects, including Ottawa’s $2.1-billion light-rail line and the $360-million expansion of the Rideau Centre, as well as gains in other sectors such as retail.
Non-residential construction is expected to continue to be a bright spot for the local economy, with several additional mega-projects such as phase two of the light-rail line, the ongoing renovations on Parliament Hill and the redevelopment of LeBreton Flats all on the horizon.
That comes against the backdrop of a federal Liberal government that’s pledged to run large deficits for the foreseeable future in an attempt to stimulate the country’s economy.
“Although not all earmarked for the National Capital Region, the increase in spending is expected to provide a modest lift to the Ottawa-Gatineau economy this year and next,” the Conference Board stated, projecting that public administration employment will edge up by 0.6 per cent this year and increase a further 1.4 per cent in 2017.
There are also positive signs in the city’s housing market as local homebuilders cautiously expand production as the economy strengthens, the Conference Board said.
The think-tank said it expects housing starts to rise by 2.8 per cent to 6,700 units this year and an additional 2.3 per cent in 2017 to 6,900. However, that’s still well below the 10-year average of 8,600 new homes.
Elsewhere, tourist-oriented businesses such as hotels and restaurants, as well as those in the arts, entertainment and recreation sector, are preparing for a banner year as an additional 125,000 to 150,000 overnight visitors travel to the National Capital Region for the celebrations surrounding Canada’s 150th anniversary.
The Conference Board estimates that these additional tourists could spend as much as $50 million during their stay.
Employment is expected to grow alongside the region’s economy; the Conference Board forecasts the number of jobs will grow by 0.9 per cent this year and 1.7 per cent in 2017. That will help to lower Ottawa-Gatineau’s unemployment rate to 6.1 per cent next year, down from 6.2 per cent in October.
Looking for more economic insights? Check out Ottawa’s Economic Outlook luncheon, hosted by OBJ and the Ottawa Chamber of Commerce, on Nov. 29. Also, pick up a copy of OBJ’s Book of Lists for more details on how various economic sectors are performing in Ottawa.