2021-22 Departmental Results Report - Operating context

As Atlantic Canada recovered from the effects of the COVID-19 pandemic, its real gross domestic product (GDP) increased by 4.3% compared to 2020. At the national level, real GDP grew by 4.8%. Real GDP growth was strongest in the Maritimes (+5.6%). In Newfoundland and Labrador, real GDP growth was below that of Canada.^{Footnote 1}

In 2021, international trade for both Canada and the Atlantic region were marked by global supply issues that created a great deal of uncertainty and disrupted production patterns in several industries owing to the COVID-19 pandemic. These supply difficulties led to significant increases in raw material prices, which had a positive impact on the value of Canadian exports. The region also benefited from higher prices and high demand for fish and seafood in 2021. Atlantic Canada’s product exports increased by 34.9%, to $37 billion in 2021. This increase is higher than the national average (+21.5%).^{Footnote 2}

Despite the COVID-19 pandemic, Atlantic Canada’s population continued to grow in 2021 (+0.8%; +18,365 people). The population grew at the same rate as the previous year owing to an increase in interprovincial migration (+15,611 people), reaching a total of about 2.5 million people by July 1, 2021.^{Footnote 3} This increase in the number of people migrating to the region from other provinces, in addition to a resumption of immigration (+19,025 permanent residents in 2021) with the gradual opening of the borders, had an impact on the regional real-estate market. In 2021, existing home sales and housing starts were up 23.3% and 16.9%, respectively, compared to 2020.^{Footnote 4} As a result, the vacancy rate in the Maritime provinces dipped below 1.8%.^{Footnote 5}

The Atlantic region’s economy had nearly returned to its pre-COVID-19 pandemic employment levels in 2021, with the creation of 41,500 jobs (+3.8%) compared to 2020. In comparison, employment in Canada increased by 4.8%. In 2021, the region added 29,600 workers to its labour force (+2.4%),^{Footnote 6} allowing it to surpass pre-pandemic levels. Despite this recovery in 2021, the region’s job market remained under pressure owing to a problem of retirement replacement. According to the Atlantic Provinces Economic Council (APEC), for every 10 people who retired in Atlantic Canada, there were seven young workers entering the workforce, compared to 8.5 young workers in Canada.^{Footnote 7}

As the economic recovery continued, companies operating in the region faced workforce shortages as well as rising input costs driven by inflation and supply-chain disruptions. In the first quarter of 2022, job vacancies were up nearly 50% (13,700 positions) compared to the first quarter of 2021 to 41,385 positions to be filled.^{Footnote 8} The job vacancy rate increased by 1.3 percentage points to 4.4%, the highest rate in the comparable data since 2016, second only to the fourth quarter of 2021 (4.6%). It should be noted that the region had its highest number of job vacancies (45,515 positions) in the fourth quarter of 2021.

While inflation was at a record high across the country in 2021, the Atlantic provinces were the hardest hit, posting rates ranging from 5.1% in Prince Edward Island to 3.4% in Newfoundland and Labrador.^{Footnote 9} Moreover, the upturn in inflation, amplified by the Russian aggression against Ukraine in February 2022, increased in the first months of 2022 to 11.1% in May 2022 in Prince Edward Island, and around 8% in the other provinces of the region compared to May 2021, according to Statistics Canada numbers.

The above factors put even more pressure on companies owing to rising input costs, workforce shortages and difficulties in recruiting skilled employees. To address workforce issues, businesses in Atlantic Canada planned to increase wages for current and newly hired employees, offer flexible work arrangements and encourage employees to participate in on-the-job training.^{Footnote 10} However, two out of five companies in the Atlantic region did not have a plan for recruiting, retaining or training staff.

In the face of these challenges, it will be critical to encourage innovation by companies in the Atlantic by investing in advanced manufacturing and other technologies in order to improve their competitiveness and support the region’s long-term economic growth.