OTTAWA, June 12, 2013 /CNW/ - Newfoundland and Labrador is expected to be the runaway leader in economic growth among Canada's provinces this year, according to the Conference Board of Canada's Provincial Outlook: Spring 2013.
Newfoundland and Labrador's real gross domestic product (GDP) fell by 4.8 per cent in 2012. But the provincial economy will make all of that up and more in 2013, growing by an estimated six per cent this year. Oil production is expected to rise by 12.5 per cent and private sector investment will continue to climb to all-time highs. In 2014, Newfoundland and Labrador is expected to lead all provinces again with growth of 3.4 per cent.
Alberta, Saskatchewan and Manitoba are also expected to grow faster than the national average of 1.8 per cent this year, but the economic risks to these provinces are mounting. Some resource projects have been postponed due to an uncertain outlook for commodity prices, higher development costs and a lack of certainty about new pipeline construction.
"The economic outlooks for provinces in 2013 are very uneven," said Marie-Christine Bernard, Associate Director, Provincial Outlook. "While the western provinces retain positive outlooks, their economies face heightened risks. Economic prospects in Ontario, Quebec and the Maritimes will be dampened by subdued business investment and fiscal restraint among governments."
Both Alberta and Saskatchewan will enjoy above-average economic growth in 2013. Alberta posted a phenomenal growth rate of 3.9 per cent in 2012, and Saskatchewan's economy will surge ahead by 3.8 per cent this year. Both oil and potash production in Saskatchewan will expand rapidly; the construction and manufacturing sectors will also advance strongly. All this activity has spurred a hiring spree, which will bring the latter province's unemployment rate to just over four per cent this year.
After last year's nation-leading growth, Alberta's economy is forecast to expand by 3.1 per cent this year. The looming risk for the province's energy sector is the uncertainty on access to new pipelines from Alberta to the U.S. and global markets. If no progress is made within the next 12 months, resource investments could be severely curtailed and the economy would take a hit.
Manitoba's economy is expected to expand at a steady annual average of 2.3 per cent over the next two years, despite restraint in public spending. Metal mining and construction will do well, which will bolster employment and consumer spending.
British Columbia's economy is expected to grow by just 1.6 per cent this year, due to weak job creation, lower business investment and a weakness in the housing resale market. However, the lull will be temporary - real GDP growth is expected to exceed three per cent next year. Forestry and mining will continue their robust growth.
Economic prospects remain muted in Ontario and Quebec - both are expected to grow by 1.4 per cent in 2013. Business investment in both provinces is expected to decline due to weaker housing and non-residential construction. And both provincial governments continue to pursue austerity programs that aim to restore balanced budgets. On the bright side, with no further sales tax increases planned for this year, household consumption in Quebec should pick up in 2013.
New natural gas production, along with a turnaround in the forestry and manufacturing industries, will help Nova Scotia's economy pick up to 1.5 per cent growth this year.
New Brunswick's economy will return to growth in 2013, although at a moderate pace of one per cent. Mining expansions - especially in potash - will bolster growth in 2013 and beyond.
Prince Edward Island's economy will advance at a moderate pace over the next two years - an average of 1.4 per cent annually.
SOURCE Conference Board of Canada