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Petro-provinces like Alberta, Saskatchewan and Newfoundland will be especially hard hit as oil prices keep sliding amid fears about China’s economy.
Global commodity prices are tanking and they’re bringing Canadian markets down with them, though experts say certain provinces are going to feel the pinch more than others.
“It’ll feel like a recession, depending on where you live in the country,” said John Stephenson, chief executive of Toronto hedge fund Stephenson & Co. Capital Management.
He said everything from oil to metals to lean hog prices are dropping as weaker growth globally weighs on demand — a downward trend that took its toll on the world’s stock markets Monday.
“Virtually everything is down in price — and significantly down, not just a little bit,” said Stephenson.
Petroleum is a good example. Canada’s energy producers, already hurt by the Saudi decision last fall not to cut production, which precipitated the slump in oil, were hit again Monday when the benchmark price for North American oil dropped to a fresh six-year low, closing at $38.24 (U.S.) a barrel. (By comparison the benchmark was $105 a barrel in June, 2014.)
Petro-powered provinces like Alberta, Saskatchewan and Newfoundland and Labrador will be especially hard hit, while the manufacturing heartland of Ontario and Quebec could get a boost from the lower Canadian dollar, says Robert Kavcic, senior economist at BMO Capital Markets.
At today’s prices, many Canadian oil producers are losing money on every barrel they extract from the ground, said Kavcic.
“It’s getting to be a lot tougher in the energy sector now. You could actually start to see some production scaled back.”
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