TORONTO—Despite growth rates varying across Canada’s regions, the head-and-shoulders lead in Western Canada appears to be narrowing, according to a BMO Economics report.
While the resource sector continues to lead the charge in western provinces, powerhouse Alberta’s slowing economic growth is expected to take another step back in 2013, according to BMO Capital Markets senior economist Robert Kavcic, dropping below three per cent this year following growth rates of 3.4 per cent and 5.1 per cent in 2012 and 2011, respectively.
“The energy sector is still humming (but) growth has been tempered at the margin by a lack of pipeline capacity, including still uncertain development prospects and a deep discount for Canadian heavy oil prices,” Kavcic said in a statement.
Growth in Saskatchewan is expected to be around 2.6 per cent this year, and 2.2 per cent in British Columbia.
Central Canada continues to face a handful of challenges, according to the financial firm, including fiscal restraint, a stronger-than-parity Loonie and sluggish U.S. demand in the first half of 2013.
“Ontario’s economy will likely decelerate to a sub-two per cent pace this year,” Kavcic said. “However, as the bulk of U.S. fiscal restraint runs its course and recovering U.S. home prices spin a positive feedback loop into construction and consumer spending, Ontario’s economy should gather momentum into 2014.
“Meanwhile, Quebec’s expected provincial-low growth rate should turn up, albeit to a still-sluggish 1.3 per cent pace.”
The strong Canadian dollar and public-sector capital spending retrenchment continue to depress growth in Atlantic Canada, with a few exceptions.
“Preparatory work for Nova Scotia’s $25-billion federal ship-building contract continues, and growth in the province will be well supported over the medium term,” Kavcic said. “Meantime, despite offshore maintenance stalling real GDP in Newfoundland and Labrador last year, underlying trends remain healthy, and real GDP growth should pace the country this year; Exxon Mobil’s announced go-ahead of the Hebron project is a bright spot.”
With the navy ship-building deal kicking Nova Scotia’s economy into gear, BMO expects economic growth to hit 1.8 per cent in the province in 2013.
Real GDP expected to rise 1.5 per cent in Prince Edward Island in 2013, according to BMO.
“Several regions of Canada continue to perform well, but businesses across the country need to remain adaptable to change,” BMO commercial banking senior vice-president Steve Murphy said.
“With the strength of the Loonie, the availability of business credit and the favourable interest rate environment, now is an excellent time for businesses to make investments that will enhance their productivity over the long term.”