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Canada's economy cooling, but not stalled

By CO Staff @canadaone |

Cooling but not stalled, Canada's economy is being estimated at 0.9 per cent according to RCB Economics, and is expected to rebound further to 1.5 per cent in 2009.

The outlook across the provinces is varied.

Saskatchewan and Manitoba have turned their economies around and are expected to lead the provinces in economic growth in both this and the coming year. In 2008 Saskatchewan is expected to lead the provinces with an overall rise in its GDP of 3.5 per cent, while Manitoba will have growth of 3.1 per cent. These numbers are expected to drop in 2009, but Saskatchewan is still expected to outperform other provinces with 3.5 per cent growth while Manitoba will drop to 2.3 per cent.

Quebec and Ontario, in contrast, are being hurt by weak external trade and ties to the US economy.

Quebec narrowly missed a recession in the first half of 2008 and its growth for the remainder of the year is projected at 0.7 per cent, increasing to 1.2 per cent in 2009.

Ontario, Canada's most populace province, is in the worst condition of all the provinces. It will narrowly missing a recession in 2008 and show the least improvement in 2009, with growth rising to a marginal 0.5 per cent.

Provinces on the east coast have shown resilience. Nova Scotia and New Brunswick are expected to have 2 per cent growth in the second half of 2008 and are expected to have 2.0 and 2.5 per cent growth respectively in 2009. PEI, which has enjoyed growth of 1.9 per cent in 2008, is expected to drop to 1.4 per cent in 2009 due to pressure on the tourism industry. Newfoundland has shown the least growth in the east, with 0.2 per cent growth in 2008 and 1.3 per cent growth projected for 2009.

The western provinces of BC and Alberta show cooling economies, but they will still fare better than Ontario and Quebec. BC's economy is expected to show 1.2 per cent growth this year and 2.1 per cent growth in 2009, while Alberta's growth is predicted to be 1.9 per cent growth in 2008, rising to 3.0 in 2009.

Looking south of the border, the U.S. economy performed better than expected in the first half of 2008 with an average pace of growth of 1.9 per cent. However, looking into 2009 RCB Economics expects recessionary growth of 0.2 per cent as the result of further credit tightening.

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