Content page

From [Institution name]

2025-26 Departmental Plan – Operational Context

Atlantic Canada is expected to outperform the national economy in a variety of key economic measures in 2025-26. In its most recent economic outlook, the Atlantic Economic Council’s real gross domestic product (GDP) growth forecasts for the Atlantic provinces ranged from 1.2% to 2.9% in 2025, above the Canadian forecast of 1.0%.^{Footnote i}  The Atlantic labour market remained strong in 2023-24 with year-to-date employment in October 2024 in the region reaching 3.4%, surpassing the national rate by 1.6 percentage points (1.8%).^{Footnote ii} Although slower population growth will moderate Atlantic Canada’s growth, pressures are expected to ease on Atlantic Canada’s housing market. Housing starts in the region were up 40% year-to-date in September, with large housing projects expected to increase 20% in 2025.^{Footnote iii}

In the coming months and years, further economic growth in Atlantic Canada will continue to be driven 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 and to reduce greenhouse gas emissions;
• the development of innovative products and services; and,
• greater access to international markets through free trade agreements.

Despite these positive economic trends, geopolitical concerns, extreme weather events due to climate change, barriers to air transportation access, potential U.S. tariffs, affordability issues and labour supply remain risks to business and community growth in the region.

Atlantic businesses and consumers are grappling with challenging economic conditions due to sustained costs and low business sector productivity.  In the fourth quarter of 2024, businesses in the region anticipate various obstacles related to costs, rising inflation and labour.^{Footnote iv} Atlantic Canadian companies have traditionally faced challenges in securing financing, in part due to the rural nature of the region, resistance from traditional funding lenders, and risks associated with any business investment. ACOA will continue supporting Atlantic Canadian businesses to create growth opportunities.

Along with cost-related obstacles, recruiting skilled employees has been identified as a key challenge among Atlantic Canadian businesses. In 2023, record population growth in the maritime provinces was sustained by immigration and interprovincial migrants. However, year-over-year population growth in Newfoundland and Labrador (1.2%), Prince Edward Island (2.8%), Nova Scotia (1.9%) and New Brunswick (2.7%) lagged behind Canada (3.0%) in July 2024.^{Footnote v} Additionally, lower immigration and temporary resident targets set in 2024 will further reduce potential output. Due to an aging population and negative natural increase, attracting people to the region is crucial for economic momentum.

Participation levels need to increase for all workers, including under-represented groups in the labour force, including women, youth, Indigenous peoples, and persons with disabilities. These efforts, along with advancements in automation, digitization, and the integration of advanced technologies, will help businesses adapt to labour shortages and an aging demographic while boosting productivity and competitiveness.