Newfoundland and Labrador to lead all provinces in economic growth in 2011
Ottawa, ON -- Canada's economic recovery has lost momentum over the past few months and growth in most provincial economies will slow in 2011, according to The Conference Board of Canada's Provincial Outlook-Autumn 2010.
Ottawa, ON — Canada’s economic recovery has lost momentum over the past few months and growth in most provincial economies will slow in 2011, according to The Conference Board of Canada’s Provincial Outlook-Autumn 2010.
“Most provinces will post solid growth this year. With the exception of Manitoba and Saskatchewan, however, all provinces can expect weaker economic growth in 2011,” said Marie-Christine Bernard, associate director, Provincial Forecast. “As we head into 2011, provinces will have to walk a fine line between reducing fiscal deficits and facing the risk of weakening economies further.”
Newfoundland and Labrador is poised to lead all provinces in economic growth this year, with real gross domestic product (GDP) forecast to expand by 4.7% in 2010. Capital investments are growing in several industries, including manufacturing and metal mining. A boom in the construction industry will contribute to growth in the province for at least two more years. In 2011, real GDP is forecast to expand by a solid 3.7%.
Compared to Newfoundland and Labrador, the rest of the Atlantic provinces can expect modest economic prospects in 2011. Nova Scotia’s real GDP will grow by 3% this year due to strength in wholesale trade, housing, and the forestry sector. In 2011, growth is expected to moderate to 1.8%, as both the provincial and federal governments begin to curb infrastructure spending. In addition to lower public investment in 2011, construction activity in the province is expected to slow following the completion of Encana’s Deep Panuke offshore natural gas platform this year — and also from weaker housing starts.
New Brunswick’s real GDP growth is expected to ease from 2.6% this year to 1.6% in 2011. The province’s construction industry will weaken next year as governments reduce infrastructure spending.
Real GDP in Prince Edward Island is forecast to jump by 4.4% in 2010 due largely to new electricity generating capacity at the West Cape Wind Farm. However, growth will moderate to 2.2% in 2011.
Quebec is expected to post real GDP growth of 2.7% this year thanks to solid job creation and consumer demand. However, a slowdown in the domestic economy will dampen growth to 2.1% in 2011. Quebec’s mounting public debt is expected to lead to a heavier tax burden, giving households less money to spend. On the bright side, the aerospace industry is beginning to turn around; both production and exports should improve over the next two years.
Ontario’s economy is forecast to expand at a healthy 3.5% this year. Exports rebounded strongly, particularly in the auto industry. Retail sales and housing demand rose as consumers took advantage of solid job creation and tax cuts. However, a high Canadian dollar and an uncertain recovery south of the border, is expected to moderate Ontario’s real GDP growth to 2.6% in 2011.
Bucking the national trend, Manitoba and Saskatchewan are forecast to advance by only 0.7% and 0.5% in 2010, respectively. The poor agricultural harvest is weighing down economic growth in both provinces. Manitoba’s economy is forecast to increase by 2.3% in 2011 thanks to an expected rebound in agriculture output and increased activity in the mining and manufacturing sectors. In Saskatchewan, the agriculture sector is also forecast to recover next year. Improved agriculture output combined with strong growth in the mining sector is expected to boost the province’s real GDP by 4.4% in 2011, the fastest growing in the country.
Bolstered by a swift rebound in oil drilling and a turnaround in the domestic economy, Alberta’s real GDP is expected to grow by 3.6% in 2010. Next year, real GDP is forecast to expand by a solid 2.8%. The energy industry will keep the goods-producing sector growing at a quick enough pace to offset another year of modest performance among services industries.
British Columbia’s economy, one of the top performers in the country this year, will post one of the weakest growth rates in 2011. The service sector will experience a post-Olympic slowdown. In addition, construction activity is expected to weaken in 2011 as housing demand and public investment wane. Following growth of 3.7% in 2010, real GDP will slow to only 2% in 2011.