2023-24 Departmental Plan - Operating Context
As some of the early economic challenges linked to the COVID-19 pandemic and associated shutdowns began to ease in Atlantic Canada through 2022, an unexpected challenge emerged in late September in the form of Hurricane Fiona. The hurricane — the most expensive extreme weather event in Atlantic Canadian history — had a devastating impact on the region and on the lives and livelihoods of Atlantic Canadians. With the impact of such extreme weather events becoming more severe in the region, it is imperative for Atlantic businesses and communities to rebuild with the changing climate in mind, and to continue overall efforts to reduce energy emissions and increase sustainability.
As the region rebuilds from Hurricane Fiona and continues its recovery from the economic slowdowns and supply-chain difficulties of COVID-19, it must now also face the headwinds of heightened inflation and economic uncertainty. In the fourth quarter of 2022, the Canadian Survey on Business Conditions showed that rising inflation and input costs (including labour, capital, energy and raw materials) were the most anticipated obstacles for Atlantic businesses in the coming months.Footnote 1 As interest rates are raised in response to inflation and as economic activity begins to slow, there is an increased risk of a recession impacting the region’s economic performance.
Along with inflation and input costs, labour shortages and recruiting skilled employees have also been identified as key challenges among Atlantic Canadian businesses, with job vacancies in the region at record levels in 2022. On this front, the attraction of newcomers to the region will be crucial to Atlantic Canada’s continued success—and the data show a promising trend. The region’s population continued to grow at a record pace in 2022, due to both interprovincial migration and immigration. At the same time, employment in the region grew by 38,300 in 2022, surpassing the 2019 pre-pandemic level by 3%.
In addition to population growth, an increase in the participation rate of under-represented groups in the labour force, including women, youth, Indigenous peoples and persons with disabilities, would support Atlantic firms in meeting their labour requirements and help sustain the region’s economic growth. These efforts, along with increases in automation, digitization and the integration of advanced technologies, will help regional businesses adapt to labour shortages and an aging demographic while increasing their productivity and competitiveness.
While economic growth in Atlantic Canada is expected to slow through 2023, it may do so less sharply than in other areas of the country due to the region’s sustained in-migration. In the coming months and years, further economic growth in Atlantic Canada will continue to be sparked by a combination of factors such as:
- growth in established or emerging and value-added sectors, including oceans, food, mining, clean technology, and information and communication technologies;
- the ability of firms and communities to make the necessary investments and adjustments in support of a greener and more sustainable economy;
- the development of innovative products and services; and
- global economic developments, including greater access to international markets.
Atlantic Canadian companies have traditionally faced challenges in securing investments in part due to the rural nature of the region, resistance from traditional funding lenders, and the risky nature of some projects. The Atlantic Canada Opportunities Agency’s (ACOA) role is to help these Atlantic Canadian businesses obtain funding and create local job opportunities. However, there are always risks associated with any business investment.
To help build a strong, innovative Atlantic economy, ACOA makes investments that help new and growing Atlantic Canadian businesses adopt/adapt/pursue innovative technologies, secure other financing to execute their plans, be globally competitive and find new export markets. While there may be times when a company does not experience the success anticipated by its owners, ACOA takes its obligation seriously in the management of grants and contributions that are business-focused and achieve results for taxpayer dollars.
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