Canadian Manufacturing

Western economic growth pulls further away from rest of Canada

Statistics Canada said improvement in economic output heavily slanted toward resource-rich regions

OTTAWA—A regional breakdown of economic performance suggests Canada’s two economies drifted even further apart in 2013.

Statistics Canada says in a new report that improvement in economic output last year was heavily slanted toward resource-rich regions.

The gap between the West and the rest was even more pronounced, said Bank of Montreal economist Robert Kavcic, widening to almost two full percentage points.

Saskatchewan, which also benefited from a bump in the agriculture sector, posted a 4.8 per cent surge in gross domestic product (GDP) in 2013, while oil-rich Alberta realized a 3.9 per cent growth rate.

Newfoundland and Labrador, which also has a resource-based economy, actually led the country in GDP improvement with a booming 7.9 per cent acceleration, but that was somewhat misleading because it came in the wake of a 4.2 per cent slump in 2012.

Meanwhile, Central Canada continued to struggle—Ontario and Quebec squeezing out mere 1.2 and 1.1 per cent growth rates, respectively—as did the Maritime provinces.

New Brunswick had no GDP growth in 2013, Nova Scotia’s was a meagre 0.8 per cent and Prince Edward Island posted a 1.4 per cent advance.

Meanwhile, Manitoba and British Columbia did a little better, coming in at 2.2 per cent and two per cent growth, respectively.

The weakness in Ontario and Quebec was concentrated on the troubled manufacturing sector, including an outright output decline in the auto industry, and home construction.

Kavcic said the results were “bang on” expectations, but the disparity was wider than anticipated.

“But a return to more normal crop conditions in the West, and the benefit of a weaker Canadian dollar and firmer U.S. demand in Central and Atlantic Canada should help narrow the gap in 2014,” he added.

Last week, Bank of Canada governor Stephen Poloz lamented that the recovery had produced a “hot and not (hot) economy,” but said he was hopeful a turnaround in non-energy exports was coming.

Still, he said even non-energy producing regions had benefited from what has been hot in the economy—oil.

“While different regions and sectors adjust differently and while these adjustments can be painful, they allow us to maximize the benefits of our rich energy endowment—and ultimately everyone gets the gift,” he said.

For the country as a whole, the agency said the economy grew by two per cent, following a 1.8 per cent gain in 2012.

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