Ottawa-Gatineau’s economy progressed sluggishly through the third quarter of this year, but economist Richard Forbes said things are expected to look up for 2025.
Already a Subscriber? Log in
Get Instant Access to This Article
Become an Ottawa Business Journal Insider and get immediate access to all of our Insider-only content and much more.
Ottawa-Gatineau’s economy progressed sluggishly through the third quarter of this year, but economist Richard Forbes said things are expected to look up for 2025.
“At this point, the Ottawa-Gatineau economy is struggling to pick up steam, just like other areas of the province, both Ontario and Quebec,” he told OBJ Friday.
Forbes is the lead economist at the Conference Board of Canada, which recently released an economic outlook for the region, highlighting its predictions for the rest of 2024 and key trends affecting growth in the region that will have an impact into 2025.
Forbes said 2023 was difficult for the economy and 2024 started much the same way. Despite recent surges in population, the housing market was bogged down by higher interest rates, resulting in knock-on slowdowns across multiple regions.
The labour market has also struggled to pick up momentum in the past few months, with 18,000 job losses in the first half of 2024, primarily in the private sector, according to numbers from Statistics Canada. The Conference Board report found that the unemployment rate hovered around six per cent in the second quarter, the highest it’s been since 2021.
But he said those trends may be reaching an end, especially as interest rates ease.
“We see it rounding the corner in the short term over the next few months and certainly heading into 2025,” he said. “This city is already well-positioned to bounce back quickly because there’s so many jobs in the public administration sector, like the government. A lot of people already have their jobs secured and are ready to start spending again when the economy turns the corner. We see pretty healthy growth heading into next year.”
In the labour market, the report predicted that nearly half of all jobs lost will be recovered by December 2024. The report said the unemployment rate is likely to fall below six per cent in the first quarter of 2025.
Over the next few years, including 2025, Forbes said construction is expected to be a major stimulator for the labour market, with projects such as LeBreton Flats, the LRT, and The Ottawa Hospital’s new Civic Campus. Those developments, he said, will create construction positions, while the finished facilities will introduce new jobs to fill, including in health care.
Lower interest rates will be especially impactful on the housing market, Forbes added.
“A big part of our forecast is having the housing market coming back as interest rates go down,” he said. “That will affect a number of sectors in the Ottawa-Gatineau area. Industries such as finance and insurance, they benefit from a strong housing market. A lot of contracting-type jobs, like electricians and housing renovations really stand to benefit. Legal services as well. There’s a whole bunch of services that benefit, so that will lead to job growth next year.”
Compared to other major Canadian cities, Forbes said Ottawa’s economic status is solidly average, with the public sector offering significant stability but also preventing any major boom.
It isn’t all good news. A growing number of employees are on the brink of retirement, especially in the government sector. Forbes said their exodus from the workforce is expected to have significant impacts on Ottawa’s public sector.
“The federal government does plan to cut 5,000 jobs over the next few years,” said Forbes. “That’s Canada-wide, but a lot of those, of course, are located in Ottawa. Their plan is to do that through attrition, which is really retirement. They retire and the government may not replace those jobs. That’s going to hurt the overall labour market and potential for jobs in the city.”
Even as the economy recovers, Forbes added that lower immigration targets might tighten Ottawa’s labour market, making it more difficult for businesses to find workers, even if they have the means to hire.
But overall, Forbes said things are looking up.
“The good thing is that the economy is turning around next year, with pretty strong prospects in the private sector and probably better tourism results than we’ve seen over the past two years.”
