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Regional economic trends emerge despite lacklustre growth

By Sara Bedal |

Canada's economic recovery may be on pause, but a recent report predicts that the Western provinces will generally see more robust growth in 2011 than the other provinces. Alberta and Saskatchewan are expected to lead the pack, with estimated GDP growth in 2011 of 3.5 per cent and 3.3 per cent, respectively.

High commodity prices are expected to stoke resource investment and production in the West and support relatively firmer employment, income and spending trends there, according to Scotia Economics' latest Provincial Trends report. It also predicts that the Atlantic region will see fairly steady, moderate growth in the year ahead while Central Canada's output growth is expected to moderate considerably.

"The slower national momentum over the spring and summer is expected to persist into 2010, reflecting a number of factors, including a winding down of inventory restocking, a cooling off in housing activity and a more cautious consumer," says Alex Koustas, an economist with Scotia Economics. "Meanwhile, resource-related activity is ramping up alongside strong emerging market demand for key industrial products, which along with a weaker U.S. dollar, is boosting commodity prices."

Here's a snapshot of the provinces' expected GDP growth in 2011:

Alberta – 3.5 per cent

Further investment in the resource sector will fuel additional gains in the energy, manufacturing and construction sectors.

Saskatchewan – 3.3 per cent

The recovery is being led by a resurging potash industry, investment in the resource sector and continued expansion of the province's service sector feeding off strong in-migration.

Newfoundland & Labrador – 3.1 per cent

A rebound in commodities, most notably iron ore and nickel, will help drive the province's expansion, with support from tourism and strong consumer spending.

British Columbia – 2.8 per cent

Growth will be supported by strength in commodities — coal and copper in particular — and increased shipping activity. Private-sector services have started to turn around and will likely be led by gains in professional and technical services.

Manitoba – 2.5 per cent

Growth in 2010 was led by services, most notably in the public sector, with an advance in utilities.

Ontario – 2.0 per cent

The service sector will anchor most employment gains, with private-sector service growth counterbalancing cautious hiring in manufacturing and the public sector.

New Brunswick – about 2.0 per cent

While exports have rebounded considerably in 2010, growth is expected to slow until a more pronounced recovery takes hold in the United States. Although the province outperformed most of its Canadian counterparts during the recession, growth will be constrained by weak employment gains over the forecast period.

Quebec – 1.9 per cent

Investment in mining and manufacturing as well as hydro will supplement continued infrastructure spending, while private-sector service gains will help drive growth during a transitional period for manufacturing.

Nova Scotia – 1.9 per cent

After avoiding the worst of the recession, Nova Scotia has seen an uneven recovery in manufacturing and a further, albeit more moderate, decline in its energy sector.

Prince Edward Island – 1.9 per cent

It predicted that potato production will pick up, tourism will continue to grow and activity will strengthen in the aerospace sector. The cancellation of a number of renewable energy projects will temper growth somewhat compared to 2010.

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