Operating context and key risks

Operating context and key risks

Operating context

Western Canada accounted for 38 percent of Canada’s economy in 2018 and nearly a third of the national population. After leading the country in economic growth over the last decade, the western economy has slowed considerably in the wake of weak oil and commodity prices, and converged closer to the national growth rate of 2.1 percent in 2018.

In 2018, Alberta and Saskatchewan’s economies grew at 2.3 percent and 1.6 percent respectively. ⁱ Lower oil prices and a widening price differential continued to temper growth and led to spillover effects in the labour market and consumer spending. The unemployment rate in 2018 averaged 6.6 percent in Alberta and 6.1 percent in Saskatchewan ⁱⁱ , the highest among provinces outside of Atlantic Canada.

Manitoba’s economy grew by 1.3 percent in 2018. The province had record high investments in the energy, manufacturing, and residential and construction sectors, and strong growth in exports of goods which grew by more than 12 percent. However, this growth was offset by a slowdown in consumer spending, mine closures, and persistent weak market conditions for base metals.

While still leading most provinces, BC’s growth rate has come down from the 2014-17 average  of 3.2 percent to 2.4 percent in 2018. As expected, the correction in BC’s housing sector continued; home sales fell by 25 percent, with consumers reacting to the tighter lending policies.

Western Canada is home to over 55 percent of Canada’s Indigenous Peoples. While they are one of the youngest and fastest-growing population in Canada, there remains a significant economic gap between the Indigenous and non-Indigenous population. Canada’s Indigenous unemployment rate is more than double the non-Indigenous rate. Saskatchewan and Alberta had a particularly high Indigenous unemployment rate.

Underrepresented groups such as women and youth, continued to face barriers. Lower relative numbers of women in higher-wage occupations such as executive and science, technology, engineering and mathematics (STEM) jobs have contributed to a higher gender wage gap in the West than nationally.

Additionally, less favourable employment conditions in the traditional sectors such as oil and gas and construction, along with the lingering effects of localized economic slowdowns have resulted in increases in youth unemployment rates in related sectors in recent years.

Throughout 2018-19, WD supported the Government of Canada’s Innovation and Skills Plan to promote economic development in western Canada. These activities included undertaking research on western Canadian industry sectors, engaging with regional stakeholders across sectors, consulting international cluster experts, investing in women-led businesses, and streamlining access to WD’s innovation program funding. Additionally, WD provided funding to support workers and communities in the West adapt to Canada’s transition to a low-carbon economy.

Key Risks

In the 2018-19 Departmental Plan, WD identified two key risks: changing economic conditions may reduce the revenues of the department’s partners, in turn leading to reduced co-investment in projects aimed at growing clusters and promoting inclusive growth; and, changing economic conditions could limit the potential for improved economic outcomes for the underrepresented groups WD supports through its inclusiveness priority.

During 2018-19, spending by WD’s partners, such as most provincial governments, was constrained. Private sector capital investment was also down. Partly in response to this context, WD made strategic investments. In support of its cluster priority, WD made investments to encourage an innovative business ecosystem in the West. WD also invested in projects that support inclusive economic participation for Indigenous peoples, women and youth.

Slower economic growth in the region did spark public debate about what governments, industry and communities can do to accelerate the economy. In September 2018, WD launched public engagement to seek the views of western Canadians about their vision for the future of economic growth in western Canada. The What We Heard Report captures the feedback from more than 450 organizations and individuals and was used to shape Grow West: The Western Canada Growth Strategy. The strategy is a call to action to position the West for success over the next ten years. The goal of the strategy is to create a more innovative, inclusive and connected economy that continues to grow and flourish.

WD will continue to engage with federal partners, provinces, communities, Indigenous organizations, industry, business leaders, academia, and other stakeholders to bring the strategy to life.

WD’s Departmental Results Framework and Program Inventory of record for 2018-19 are shown below: