The Royal Bank of Canada has identified one province that will defy the national trend of slowing economic growth this year, driven by higher resource prices. Surprisingly, it is not Alberta but Newfoundland and Labrador that tops the RBC growth ranking.
Newfoundland and Labrador's Economic Boom
Newfoundland and Labrador's real gross domestic product is forecast to rise to 4 per cent in 2026, up from 3.5 per cent the previous year, making it the only province where growth is expected to accelerate. Higher commodity prices and increased production in both the oil and mining sectors led RBC to upgrade its forecast for the province from 1.8 per cent to 4 per cent.
Oil output year-to-date has surged nearly 30 per cent after idled offshore vessels returned to full operation, while oil prices have soared. Mining also contributes significantly, with the Valentine Gold mine in central Newfoundland commencing production and expected to reach full capacity in the second quarter of this year.
RBC chief economist Frances Donald noted, "The confluence of production expansion and high prices is setting the natural resources complex up for a record year."
Limited Job Growth Despite Boom
However, the resource industry's capital-intensive nature means output growth does not translate into a flood of new jobs. "The commodity boom is narrowly concentrated, leaving households largely on the sidelines," the economists said.
Since the onset of U.S. tariff war early last year, provincial economies have diverged dramatically. Manufacturing hubs in central Canada have been hit hardest by tariffs, while energy and mining provinces have outperformed. "Tariffs, demographic shifts and commodity cycles are keeping Canada's provinces on different tracks," according to RBC.
Alberta and Other Provinces
Alberta ranks second, with the energy sector driving growth. The Iran war has kept oil prices high and supplies tight, and with the Trans Mountain pipeline expansion, energy exports to non-U.S. markets have increased by $4 billion or 65 per cent year over year. Planned optimizations could boost pipeline capacity by 90,000 barrels per day by next year. Despite this, RBC puts Alberta's GDP growth at 2 per cent in 2026, down from 2.7 per cent in 2025, as slowing population gains weigh on other sectors like residential construction.
Central Canada faces a bleak outlook. Ontario's real GDP growth is expected to slump to 0.4 per cent this year from 1.3 per cent in 2025, which would be the slowest year outside a severe recession. U.S. tariffs continue to burden manufacturing and investment, especially in southern regions, while a housing correction further drags down growth.
