July 31, 2012, Ottawa — Weakening growth in emerging markets, Europe’s fiscal and economic woes, and sluggish job creation in the United States are weighing on growth in the provincial economies, the Conference Board of Canada warned.
Despite the global economic uncertainty, the board’s Provincial Outlook –
Summer 2012 forecasts solid growth in Western Canada this year and
next, while Central and Atlantic Canadian economies will slowly gain
traction over the same period.
“For the most part the outlook for the provinces remains positive,
despite the bumpy ride in the short term,” said Marie Christine Bernard,
associate directory of provincial outlook with the Conference Board of
Canada. “Interest in developing natural resources across Canada will
provide a solid foundation for job creation and income prospects in the
years to come, so that stronger economic growth can be expected next
year and in 2014.”
The swoon in prices for many commodities in recent months will have an
impact on resource sector profits. Most metals and minerals prices,
however, remain relatively high, which will continue to drive
exploration activity and new mine construction.
The Alberta economic outlook is generally positive with growth of 3.8
per cent forecast this year – the highest among all the provinces. But
weak natural gas prices and volatile crude oil prices, particularly the
wide spread between Canadian crude and the international benchmark, are
leading to uncertainty about future capital spending plans in the energy
sector. The Conference Board forecasts that prices will remain
sufficiently elevated so that energy sector investment continues to grow
strongly in Alberta. In addition, the province has positive outlooks
for employment, income growth and consumer spending.
After three poor years for agriculture in Manitoba, a recovery in the
sector will help boost overall real gross domestic product (GDP) in the
province this year. Stronger growth in the mining, manufacturing and
construction industries will also contribute to a gain of 2.9 per cent
this year. Furthermore, Manitoba's average unemployment rate will edge
down from 5.4 per cent in 2011 to 5.2 per cent in 2013.
Cuts in potash production earlier this year will lower Saskatchewan's
bottom-line growth to 2.4 per cent, half its 2011 growth. But the
provincial economy is forecast to lead all provinces in real GDP growth
in both 2013 and 2014, thanks in large part to a rebound in the
non-metal mining sector.
British Columbia's forecast is generally positive over the next two
years, with real GDP growth of 2.3 per cent this year and 2.8 per cent
in 2013. The mining sector – thanks to increasing unconventional natural
gas production – will help offset more moderate export demand for the
manufacturing and forestry sectors. Strong employment gains will support
the province's domestic economy.
Despite a more pessimistic outlook than previously forecast for its main
trading partners, Ontario's economy is holding up fairly well and
growth of 2.1 per cent is forecast this year. Exports are a bright spot
in the outlook, in part due to surging U.S. vehicle sales. As the public
sector share of GDP eases slightly, households and businesses will fuel
growth this year.
Public sector fiscal restraint and a weakening housing market are among
the factors limiting growth in the Quebec economy to 1.4 per cent in
2012 and 1.8 per cent in 2013. One bright spot is the mining industry,
due to a rapid increase in iron ore production along with the
development of several new mines. Quebec's overall exports, however, are
still not growing strongly.
A turnaround in Prince Edward Island's goods-producing sectors,
particularly manufacturing and primary industries, will bring the
Island's economy to the front of the pack in the Maritimes, with growth
of 1.5 per cent in 2012. Despite a squeeze in public spending as the
provincial government looks to balance its books, a similar outlook is
forecast for next year.
Nova Scotia's real GDP is forecast to grow by just 1.2 per cent this
year as weakness in the construction industry, public sector austerity
and only a slow comeback in consumer spending is in store for the
province. Similarly, New Brunswick's economy is expected to advance by
only 0.7 per cent this year. Both provinces can expect a better
performance in 2013. New Brunswick in particular is forecast to grow by
two per cent in 2013, due to improvement in manufacturing and a major
jump in mining production. Real GDP in Nova Scotia is expected to
advance by 1.8 per cent in 2013.
Newfoundland and Labrador's economy is forecast to gain just 0.7 per
cent in 2012. Total oil production will decline by 18.5 per cent this
year, due to maintenance work at the Terra Nova and White Rose offshore
petroleum projects. Otherwise, the Newfoundland and Labrador economy is
healthy – for example, the construction industry is on pace to expand by
23.5 per cent in 2012.
For more information about Provincial Outlook – Summer 2012, visit www.conferenceboard.ca.
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