Operating context – PrairiesCan 2025–2026 Departmental Plan

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Economic context

The Prairie economy is projected to experience low to moderate growth in 2025, amid ongoing domestic and global pressures following the post-pandemic rebound. Employment growth is expected to slow, while the unemployment rate edges up. Despite the easing of monetary policy and falling interest rates, near-term business conditions remain subdued.^{Endnote 1}

Real GDP forecasts for 2025 by Canada’s four largest banks have generally been revised downwards since the start of the new year. Canada’s real GDP is now expected to grow by 1.4% in 2025, aided by tailwinds from commodity markets, primarily oil, gas, and mining.^{Endnote 2} This is nearly level with the 1.5% growth recorded in 2024, but is lower than previously anticipated. These revised growth forecasts clearly signal a slowing of real GDP growth driven by increased global trade uncertainty centered around countries such as the United States and China.

Prior to elevated global trade uncertainty, Canada was expected to perform reasonably well among its international peers. However, Canada’s real GDP growth is now forecast to be below most countries in the Group of Seven (G7).

Despite national economic uncertainty, the economies of commodity-driven Prairie provinces are positioned to outperform many of their provincial peers. Alberta is expected to lead national real GDP growth (2.2%)^{Endnote 2} through robust oil production and exports. Saskatchewan also has a positive outlook (1.8%)^{Endnote 2} for 2025 supported by sustained high commodity prices and resulting strength in mining and agriculture. Manitoba’s diversified economy continues to provide relative stability, but subdued manufacturing sector growth – particularly due to trade-related headwinds – is expected to contribute to lower real GDP growth (1.2%)^{Endnote 2} relative to the other Prairie provinces and the national average.

Opportunities

The Prairie economy continues to build on its strong foundation in resource extraction and agriculture, with expanding opportunities in value-added agriculture and technology sectors. Growing investment in these areas demonstrates their potential to further diversify the regional economy while building on traditional strengths.

The Prairie provinces have an opportunity to continue expanding the production of value-added agricultural goods, capturing more economic value from primary agricultural production.

In addition to agricultural opportunities, the Prairie technology sector continues to grow and innovate, creating new economic opportunities across the region. Investment in emerging technologies, particularly in clean technology, demonstrates the sector’s growing potential.

Challenges

Global trade tensions have intensified since the beginning of the year, driven largely by a shift in the United States’ trade policy. Chinese trade policy is also affecting the Prairie economy, but to a much lessor extent than the United States. Measures by major economic powers that fundamentally alter global trade dynamics could have adverse effects on the Prairie economy, such as lower GDP growth, higher inflation, reduced employment, and higher unemployment. Moreover, economic certainty is a critical factor for businesses when making investment decisions. The mere prospect of trade actions (such as tariffs on Canadian imports) can undermine business confidence and lead to reduced investment.

Natural disasters in the Prairies are becoming more frequent and severe, posing heightened risks to the region’s economy given its orientation towards natural resources, primarily resource extraction and agricultural production.

Given the above context of the Prairie economy, Prairies Economic Development Canada (PrairiesCan) will continue to tailor its programs and services to help our clients improve their competitiveness, resilience, and economic growth. Our mandate and work, to improve economic development in the Prairies, will assist these client businesses, communities, and not-for-profit organizations, take advantage of new and existing opportunities.