Canada experiencing slower growth: Report

Alberta to lead country in job creation
||Last Updated: 07/12/2011

After a strong 18 months of recovery, the Canadian economy is gravitating to a slower growth trend, according to Scotia Economics' latest Provincial Trends report.

The western provinces, along with Newfoundland and Labrador, are expected to outperform the rest of Canada, building on a broad trend that has developed over the past decade. Alberta is expected to lead the country in job creation.

Central Canada has shown significant progress, with a restructured manufacturing sector displaying solid performance and an increased range of services providing potential for stronger future gains.

The performance in Atlantic Canada is expected to be mixed. Increased investment in the resource sector will support strong growth in Newfoundland and Labrador, while the Maritime provinces will be challenged by sluggish employment performance and fiscal restraint.

Provincial Outlook

British Columbia
British Columbia will outperform the national trend, but lag behind Alberta and Saskatchewan, with output growth expected to average roughly three per cent in 2011-12. Expansion in the commodity sector is being paired with burgeoning high-tech industries and diversification efforts by several established industries, most notably forestry. Development of the province's mining industries will be a key source of growth.

Once again, Alberta will lead Western Canada's outperformance, with growth averaging 3.7 per cent in 2011-12. The oil sector will be the engine behind Alberta's growth, with significant investment and output gains contributing to the increasing momentum. Alberta is also expected to lead the country in job creation during 2011-2012.

Saskatchewan will once again find itself at the top-end of regional economic growth, with output advancing at an average rate of 3.5 per cent throughout 2011-12. Further expansion and development of the potash and crude oil industries have fostered job growth and an influx of residents. Agriculture, though suffering through another difficult start to the growing season, will likely contribute positively given high export prices.

Manitoba is expected to experience GDP growth averaging 2.5 per cent in 2011-12. A diversified economy will ensure healthy contributions from a number of sectors including food packaging, machinery manufacturing, utilities and continued outperformance from its finance, real estate and insurance industries. Extensive flooding will severely dampen agricultural output this year, but re-development efforts related to infrastructure and property will provide some offset.

After outperforming in 2010, Ontario's growth is expected to average 2.3 per cent over the 2011-12 period, trailing Western
Canada and falling roughly in line with Quebec. A number of factors will restrain growth, including a high Canadian dollar and a subdued economic recovery in the United States. Ontario's service sector has grown from a 68 per cent share of the province's economy in 2000 to over 75 per cent in 2010, highlighting the added importance the segment has for the province's overall performance.

Quebec withstood the recession better than most provinces, and will see growth advance at a rate of 2.4 per cent over the 2011-12 period. The private sector has shown strength, with a diverse manufacturing base, a dynamic service sector and a burgeoning resource sector. The provincial government has been proactive in addressing the province's debt burden but Quebec will experience some drag on economic growth with higher taxes being implemented and cuts in the province's relatively large public sector taking place over the next two years.

New Brunswick
New Brunswick is expected to see annual GDP growth average 1.9 per cent in 2011-12, trailing the national average after a strong year in 2010. Employment has been sluggish, with losses stemming from service sector segments shaken by the strong dollar, namely contact centres. Forestry, fishing, manufacturing and mining have displayed some momentum heading into 2011, but will be counterbalanced by declining capital investment and significant fiscal restraint.

Nova Scotia
Nova Scotia is expected to experience GDP growth averaging 1.9 per cent over the 2011-12 forecast period. The province has cleared some major hurdles, including stabilizing its manufacturing sector. Nonetheless, sluggish employment and wage growth will weigh on the consumer sector, while fiscal restraint also dampens growth.

Prince Edward Island
Prince Edward Island will grow in line with the other Maritime provinces, with output growth averaging 2.1 per cent in 2011-12. This represents a relatively solid period of expansion for the province historically. Output growth will be led by positive contributions from tourism and agriculture, as well as from food and pharmaceutical manufacturing.

Newfoundland and Labrador
Newfoundland and Labrador will set the pace in the Atlantic region, with GDP growth expected to average 3.3 per cent over the 2011-12 forecast period. Increased commodity production and major investments in utilities, oil and mining, as well as increased consumer spending will help offset a slowdown in offshore oil production.

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