Saskatchewan to lead Canada's growth: Report
September 14, 2011
Saskatchewan will be the fastest-growing Canadian province this year thanks to its potash and agricultural products, expanding at almost twice the national rate, according to a report by RBC.
The Prairie province's economy will expand by 4.3% in 2011 and 4.1% next year, according to the bank. Canada's economy as a whole will grow 2.4% this year. That's a 0.8 percentage point reduction from the bank's June forecast.
"2011 is shaping up to be a golden age for Saskatchewan's economy as it rides the tidal wave created by strong global demand for its various natural resources," said Craig Wright, RBC chief economist and senior vice-president. "We expect to see a positive ripple effect on incomes and capital spending in the province."
For the rest of the country the outlook is less certain, with the ongoing volatility in the financial markets rattling the nerves of both business and consumers.
Despite the uncertainty, RBC said it still believes the outlook for Canada is optimistic and that the global economy will avoid another downturn. It said growth here is likely to pick up next year, helped by a prolonged period of low interest rates.
"The Bank of Canada is likely to maintain its key lending rate at 1%, given lower expectations about the outlook for (the) U.S.," said Wright.
After Saskatchewan, Alberta and Newfoundland and Labrador will be the next best performers, the bank said.
Ontario, British Columbia and Prince Edward Island will see growth below the national average, while Quebec and the other Atlantic provinces will come at the bottom of the pack.
The Japanese earthquake - which disrupted the supply chain of auto manufacturers - and the slowdown in the U.S. are having an impact in Ontario, RBC said. Rising energy costs have also put a damper on consumer spending.
"We anticipate Ontario consumers to loosen up their purse strings in the coming months, but not enough to match last year's retail sales growth," Wright said.
Weakness in the minerals sector and retail sales are dragging on British Columbia's growth, while Quebec's manufacturers have been hit by the slowdown in the U.S. and the strong Canadian dollar, RBC said.
- The Standard
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