Tuesday, January 31, 2017

Ontario Gold for Nominal GDP Growth

In terms of nominal Gross Domestic Product (GDP) at current prices for each year (NOT adjusted for changes in the prices of each province's products), Ontario ranked 1st averaging 4.8%/year from the base year of 2013 to the latest data for 2015. BC was 2nd at with 4.5% annual GDP growth, PEI 3rd at 3.7%, Manitoba 4th at 2.8% and Quebec 5th at 2.2%. 

Why am I reporting nominal GDP growth? 2015 was an unusual year when oil prices fell sharply. As a result, Alberta's nominal GDP fell by -12.5% between 2014 and 2015. Newfoundland suffered a -11.5% GDP decline and Saskatchewan GDP fell by -5.7%. 

Alberta's real GDP measured in units of production valued at 2007 prices fell by -3.6% in 2015. But, to my mind, the -12.5% nominal GDP decline measures the pain suffered by Alberta workers, businesses and governments in 2015 better than the -3.6% real GDP fall.

Measured in real GDP, BC was the growth leader averaging 3.3% with Ontario at 2.6%.

Over short periods, provincial governments cannot be held responsible for GDP growth. Alberta does not control oil prices. Neither Ontario nor Quebec controls American demand for their exports. However, I do believe that over much longer periods measured in decades, part of the difference between Ontario vs. Quebec GDP growth rates will reflect provincial government economic policy frameworks. Let's see whether the Quebec tortoise catches up with the Ontario hare as the years go by.

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