Conference Board says economy will grow by 2.4 per cent in 2012 and 3.3 in 2013
OTTAWA—The Conference Board of Canada (CBOC) says the western provinces will power the country’s growth over the next couple of years, thanks to expected strong activity in the resource sector.
In one of the rosiest outlooks of the major forecasting houses, the Ottawa-based think-tank says Canada’s economy will expand to 2.4 per cent growth in 2012 and 3.3 in 2013.
The projections were about half-a-point better than the Bank of Canada’s and a full point higher than other observers, but have come with a caution that severe government debt problems in Europe remain a real threat to all economies.
“Private sector activity will pick up in 2012, helping to offset sharp declines in federal and provincial infrastructure spending,” says Marie-Christine Bernard, CBOC’s associate director. “But despite little direct exposure to European markets, provincial economies would be affected if the EU sovereign debt crisis spread globally. As a result, risks to the forecast remain elevated.”
The board sees strength in businesses flush with cash and strong global commodity prices, which will drive investment and production in the resource sector.
The think-tank predicted oil-rich Alberta will lead the recovery with a 3.6 per cent growth rate next year, followed closely by Saskatchewan with a 2.8 per cent gain coming off a 5.1 per cent jump this year.
The report says B.C.’s economy will grow at a more moderate pace of 2.6 per cent this year and 2.5 per cent in 2012. Manitoba’s GDP growth of 2.1 per cent in 2011 will be followed by a 2.6 per cent expansion in 2012, thanks to continued demand for buses and aerospace products.
The softness in the economy remains in central Canada and the Atlantic, as government spending restraints have weighed on provincial performance.
The Conference Board says spending by Ottawa and other levels of governments will fall by almost one per cent next year, taking $3 billion out of the economy.
Ontario is expected to record a 2.2 per cent growth rate next year, while Quebec will be somewhat weaker at 1.8 per cent.
It also believes unemployment will continue to fall next year, going from this year’s 7.4 per cent average to 6.8 per cent in 2012 and 6.4 per cent in 2013.
In raw numbers, the CBOC expects the economy to create 350,000 new jobs in each of the next two years.