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Thursday, November 18, 2010

The West is the Best - As Far As Growth in 2011 Is Concerned Anyways

Scotia Trends released a report yesterday ranking economical advancement by province and the results are clear - Western Canada is the place to be.

The report cites Central Canada's reliance on the US as a big reason for Western Canada leading the pack. Alberta and Saskatchewan are in top places - largely due to their resources. In third place for growth is Newfoundland due to their natural resources.

The report credits export commodities and capital investment as the two top fuellers of Canada's economic growth in 2011.

Here's an article in full from John Morrissy of the Financial Post.

West rises out of recession's ashes

OTTAWA — The West will lead Canada in 2011 and for years to come as the country's economic strength continues to shift toward resources and away manufacturing, says the author of a new Provincial Trends report from Scotia Economics.

"With Central Canada being much more tied to the U.S. economy, we see the Western provinces outperforming mainly on the fact that the one thing that's going to keep going in spite of decreased activity in the U.S. is our commodity exports," said economist Alex Koustas.

The divide between the East and the West is reflected in the bank's provincial growth forecasts for 2011. While the expectation is for generally slower growth, the numbers wane when you move out of the resource-based West and into manufacturing-focused Ontario and Quebec

Alberta will lead with growth of 3.5 per cent, followed by Saskatchewan at 3.3 per cent. In Ontario and Quebec, the forecasts drop to two per cent and 1.9 per cent, respectively.

"With the consumer growth profile in Canada shifting down a bit along with the housing sector, the two big drivers are going to be (commodities) exports and capital investment," said Koustas. "A lot of the big capital projects that we're seeing are in the West."

Alberta's energy sector and its renewed slate of oilsands projects are going to be "a huge driver of investment," along with continued growth in Saskatchewan's potash industry and oilfields, and British Columbia's mining and natural gas industries, Koustas said.

Newfoundland and Labrador also ranks near the top of the growth profile for the year ahead, at 3.1 per cent, driven by demand for its deposits of iron ore and nickel.

The general slowing trend in the economy results from a winding down of the inventory restocking cycle, a cooling in housing activity a more cautious consumer and a winding down of recession-related stimulus spending.

But a lower-priced U.S. dollar and commodity demand from emerging markets will offset the decline, the report said.

As a result, "the West will continue to be one of the strongest performing regions in Canada for the next couple of years," Koustas said.

That strength is helping Central Canada withstand the effects of an over-priced loonie and weak demand for Canadian exports from the U.S., he added.

"Now a lot of manufacturers are shipping out west to supply those capital projects and avoiding U.S. currency problems altogether."

The Maritimes are projected to deliver growth of about two per cent in 2011, which reflects the fact that New Brunswick, Nova Scota and Prince Edward Island were hit less hard during the recession and are therefore not showing the kinds of rebounds from more depressed levels like in Alberta.

Forecast GDP growth for 2011

British Columbia 2.8%

Alberta 3.5%

Saskatchewan 3.3%

Manitoba 2.5%

Ontario 2.0%

Quebec 1.9%

New Brunswick 2.0%

Nova Scotia 1.9%

Prince Edward Island 1.9%

Newfoundland and Labrador 3.1%

Source: Scotia Economics

Read more: http://www.montrealgazette.com/business/Economic+sluggishness+affect+Central+Canada+most/3841630/story.html#ixzz15gQJpPdg

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