Despite solid GDP growth in 2021 with the easing of public health measures related to COVID-19, a nonprofit think tank says Hamilton’s economic activity has continued to grow in 2022 but is gradually slowing.
The latest edition of the Conference Board of Canada (CoC). Insights into the big city Forecast attributes imminent decline to inflationary pressures, rising interest rates, supply chain issues and many industries facing labor shortages.
CoC economist Viktor Cicman told Global News he expects Hamilton’s GDP to grow to 3.0 percent this year, but to grow slowly to around 2.2 percent over the next two years.
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“At the end of this year, we’re starting to see growth slowing down,” Cicman said.
“Interest rates are rising and are helping to cool the economy, allowing inflation to go back to a normal 2.0 percent and here we are seeing a slowdown across the country. Most municipalities will see it.”
The city’s 2021 job numbers recouped 23,000 of the more than 26,000 jobs lost in 2020.
As of July 2022, the city’s unemployment rate is still hovering around an all-time low at 4.3 percent.
Despite job gains, labor shortages will continue to be a problem for restaurants, hospitality and leisure, the CoC said.
The “strength” industries heading into 2023 are expected to be in the city’s manufacturing, healthcare and professional services.
Cicman suspects some of the best growth rates will be in the healthcare sector, which has become a key development cluster in Ontario following the pandemic.
“We’re still in a pandemic, we have an aging population … so there will still be a lot of healthcare jobs, especially as there are (staff) shortages,” he said.
Hotels, tourism and restaurants are expected to grow through 2023, but the CoC forecast does not suggest it will be easy for those sectors that seem to be suffering from the labor problems.
August retail sales could be wiped out if consumers “cut back”.
“A lot of places that offer these hookup services … are having a hard time finding people,” Cicman said. “They need to reduce the hours available. At the same time, their costs are increasing and profit margins are very tight.”
The CoC’s outlook for the country suggests that Saskatoon will outpace all other major cities in GDP growth and erase an eight-year GDP slump that saw the 2020 figure 4.7 percent lower than 2014.
The cooling housing market will weigh on economic growth in Vancouver, Victoria and Québec City, which will experience slower but still healthy economic growth year-on-year with GDP rates of 2.5 to 2.8 percent.
Cicman says housing will also be critical to Ontario’s future economic health, especially as Statistics Canada reveals that international migration accounted for 94.5 percent of the estimated 285,000 new residents who arrived between April and July 2022.
“This appears to be on the agenda of the Ford administration and many mayors,” Ciman said.
“More housing needs to be built, especially as we expect immigration to increase … as many people come to the GTA region and Hamilton.”
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