Resourceful provinces big economic winners
If your business is located in a resource-rich province, hang on to your hat: high commodity prices mean boom times ahead. Not so much in manufacturing centres Ontario, and Quebec, however, where growth will be fair to poor.
Conference Board of Canada
Energy prices will help to drive economic growth in Saskatchewan and Alberta.
OTTAWA: If your business is located in a resource-rich province, hang on to your hat: high commodity prices mean boom times ahead. Not so much in manufacturing centres Ontario, and Quebec, however, where growth will be fair to poor.
The Conference Board of Canada’s Provincial Outlook – Spring 2011 notes Newfoundland and Labrador, Saskatchewan and Alberta in particular will ride high commodity prices to the strongest economic growth in Canada this year.
“With agricultural, energy and mineral prices heating up, provinces that have these resources in abundance will do well – despite hesitation among consumers and tightening fiscal policy,” said Marie-Christine Bernard, associate director of the outlook report.
Newfoundland and Labrador is expected to top growth in real gross domestic product (GDP) this year at 4.6% thanks to high energy and metal prices that are prompting resource companies to invest billions in iron ore projects, nickel processing and offshore oil developments. The report also forecasts construction output to rise by 20%.
PEI’s economy will expand 3.3% thanks to a second consecutive year of strong increases in wind power electricity generation.
And bright prospects for potash and the energy sector in Saskatchewan will bolster mining output, which will spill over into related manufacturing and transportation industries. GDP is to grow by 4.2% this year and next, with unemployment potentially falling to 4.6% by the end of 2012.
In Alberta, oil sands investment will drive real GDP growth of 3.1%, with solid job creation supporting income growth and consumer spending over the near term, says the report.
A $320 million refund payment from Manitoba Public Insurance will boost personal disposable income in the province, providing a lift to the domestic economy as the province’s GDP rise to 2.4%.
Meanwhile, BC’s economy is in a lull, growing by just 2% this year compared to more than 4% last year, which was enhanced by the 2010 Winter Olympics and stimulus spending. The report notes forestry is waiting on a recovery in the US housing market.
Ontario’s auto sector was recovering nicely thanks to growing US vehicle sales, but is slowing because of supply-chain disruptions resulting from the Japanese earthquake. The Conference Board says vehicle assembly at Ontario’s Toyota and Honda plants will be held back in the second quarter, while reduced infrastructure spending will further limit growth, forecast to be 2.1%. On the brighter side, Ontario’s domestic economy will benefit from strong income growth and the creation of more than 125,000 jobs this year.
Quebec is looking at slow economic growth over the next two years, this year a sluggish 1.8%. There will be tax increases to balance the province’s books within the next three fiscal years, but trade will contribute to growth in 2012 as exports accelerate from the recent surge in new orders for aerospace products.
Nova Scotia will see 2% growth and New Brunswick 1.5% as both provincial governments clamp down on public spending.