Q3 2021 Economic Snapshot

October 27, 2021

After a strong Q3, SREDA has changed Saskatoon’s economic rating from a B- to a B. Saskatoon’s growth forecast from the Conference Board of Canada has also been revised from 5.4% to 6.5% for 2021. We’ve summarized the lay of the economic land for our Q3 snapshot:

Business confidence in Canada rose to record levels in Q3 despite supply chain constraints, a labour shortage and expectations of rising inflation.
Labour market recovery is asymmetrical, with recovery driven by select industries that have recovered to pre-pandemic levels. Labour shortages and supply chain issues, if not addressed, could weaken the pace of the economy’s recovery.
Commodities such as potash and oil are seeing rising prices, sales and production. Agriculture, however, is expected to see a decline in growth for 2022 because of drought-driven decreases in crop production this year.
Consumers expect to spend one-third of the savings they accumulated during the pandemic by the end of 2022.
Saskatchewan lags behind its peers in terms of vaccination rates. The province has the second highest number of COVID cases per 100,000 people and the third lowest vaccination rate, at 64.3%, of all Canadian provinces.

Economic Forecast: Saskatoon Region

Saskatoon’s growth forecast has risen from 5.4% to 6.5% for 2021, in contrast with the global trend of forecasts being revised downward. Growth of 3.8% is expected in 2022.

Table 1: Economic Growth Forecast for Saskatoon CMA

	Q1 2021	Q2 2021	Q3 2021	Q4 2021	Q1 2022	Q2 2022	Q3 2022	Q4 2022
Quarterly GDP (%)	2.3	1.2	1.8	1.6	1.2	1.2	1.0	0.9

Source: Conference Board of Canada

Economic Forecast: Saskatchewan

According to five major Canadian financial institutions and Canada’s leading economic think tank, the province’s economic growth forecast for 2021 has been revised downward to 4.6% – from 5.7%. This is expected to be followed by growth of 4.1% in 2022. (Table 2).

Table 2: Consensus Economic Growth Forecast for Saskatchewan (%)

Financial Institutions	2019	2020f	2021f	2022f
RBC	-0.7	-5.2	3.8	5.9
TD	-0.8	-5.2	4.0	3.4
BMO	-0.7	-5.2	4.0	3.2
Scotiabank	-0.7	-5.2	4.4	3.6
National Bank of Canada	-0.7	-5.2	4.8	3.9
Conference Board of Canada	-0.9	-5.2	6.8	4.6
Consensus Economic Growth	-0.7	-5.2	4.6	4.1

Source: RBC, TD, BMO, Scotiabank, NBC and CBoC

Looking Ahead

Spending is forecast to increase for consumers and businesses alike, with businesses increasing their investment to address rising demand and labour shortages. Supply chain issues are expected to last until the second half of 2022 and interest rate hikes are expected – potentially early next year. Moving forward, agriculture will be important to watch in 2022, as severe drought conditions heavily impacted crops this year.

Q3 2021 Economic Dashboard