Skip to content

How Quebec became Canada’s economic darling amid pandemic

For the first time in history, economic growth in Quebec last year outpaced every other province.

With GDP growth of more than six per cent in 2021, Quebec is expected to have posted a pandemic economic recovery more powerful than that of the US and the European Union (EU), as well as its Canadian peers.

Those numbers become official in coming weeks. But Quebec’s strong performance in the first three quarters of 2021 alone ensures it the crown.

“The strength of Quebec’s economic rebound from COVID-19 has been nothing short of remarkable,” said Marc Desormeaux, senior economist at Scotiabank Economics.

The question now is whether Quebec’s status as an economic outperformer is sustainable. Or will Quebec slip back into its tradition of lagging other provinces in GDP growth?

After all, some of the factors behind last year’s historic reversal are “transitory.”

Quebec’s astute pandemic management won’t be the powerful factor in driving economic growth in years ahead the way it was in 2021, with a hoped-for winding down of pandemic conditions in 2022 and beyond.

And Ontario, the benchmark against which Quebec is most often measured, suffered a slump in its all-important auto sector that mutated its economic comeback in 2021.

History would argue against Quebec’s emergence as a permanent leader in economic growth after decades of lagging its peers.

But Quebec has been quietly laying a foundation for an economic renaissance for at least a decade. Its success was evident before the pandemic, when Quebec posted above-average gains in jobs, wages, and economic output in the years 2017 to 2019.

Here are some elements of a Quebec economic transformation that have mostly flown under the radar.

Economic diversity. There is no one economic sector in Quebec with the outsized economic impact of Ontario’s auto industry or Alberta’s reliance on energy.

Instead, Quebec relies on roughly equal measure on agriculture, manufacturing, biotech, transportation, education services, health care and life sciences, multimedia, energy exports and financial services, among other mainstays.

During the pandemic, Quebec’s economy was hit with sharp downturns in its aerospace, mining, and tourism sectors. But the negative impact on the economy was negligible.

Quebec is the country’s top producer of dairy products, hydropower, pharmaceuticals, and video games. These sectors are less vulnerable to recessions than most.

Knowledge economy. A large portion of Quebec’s population, more than 1.1 million Quebecers, work in science and technology. And for the past decade, Quebec has been outspending most jurisdictions, at home abroad, on R&D as a per cent of GDP.

Premier François Legault’s government has confronted the labour-shortage problem more vigorously than most.

It has recently committed almost $3 billion over five years to pay for the recruitment and training of as many as 170,000 workers in sectors with high job vacancies.

Students planning a career in education, health care, daycare, engineering, information technology and other essential sectors are now eligible for “incentive scholarships” that can amount to as much as $20,000 over four years.

immigration. In a reversal of the out-migration that has long characterized Quebec, net inflows of people relocating from Ontario to Quebec reached a record high last year.

An attraction for interprovincial immigrants is Quebec’s lower housing prices. Another lure is a high Quebec job vacancy rate of 7.3 per cent compared with Ontario’s 5.6 per cent.

Quebec has also become a magnet for French nationals, who see Quebec as an open society compared with cultural and economic rigidity in France.

That long-term phenomenon has spiked in recent years, with an estimated 150,000 French nationals — young urban professionals, mostly — now living in Quebec.

Maintaining those population inflows could add a full one per cent to Quebec’s GDP by decade’s end.

Abundance of business capital. Québec believes in national business champions. And it finances their ambitions with an unmatched array of deep-pocketed funders.

Those include the Caisse de dépôt et placement du Québec, Investissement Québec and the labour-backed Fonds de solidarité FTQ.

Among the companies it has nurtured in recent years are the Montreal-based firms Nuvei Corp., a developer of global payment systems; and Lightspeed Commerce Inc., which makes point-of-sale software for retailers and restaurants.

It has also backed the Quebec City-based firms Coveo Solutions Inc., a developer of artificial intelligence platforms for the e-commerce industry; and Eddyfi NDT Inc., whose advanced diagnostic software is used to test the integrity of bridges and other infrastructure.

Like the more established members of “Quebec Inc.” including CAE Inc., Alimentation Couche-Tard Inc. and trucking giant TFI International Inc., the ambitions of these younger firms are global.

Quebec Inc. refers to the province’s outsized number of national and global industry leaders in their fields.

If that moniker was applied to the entire economy, and you could buy shares in it, Bay Street would likely apply a “Buy” recommendation on its stock for its long-term growth potential.


Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.


Leave a Reply

Your email address will not be published.