OTTAWA, Feb. 18 /CNW/ - Most Canadian provinces are turning their
attention to reducing fiscal deficits this year, which will restrain
government spending and weaken their economic growth prospects in 2011,
according to The Conference Board of Canada's Provincial Outlook-Winter 2011.
"Only four provinces are forecast to post surpluses in the 2010-11
fiscal year - Saskatchewan, Newfoundland and Labrador, Nova Scotia and
Alberta," said Marie-Christine Bernard, Associate Director, Provincial
Outlook. "As governments start to rein in deficits, public investment
and spending growth will contribute little to provincial economic
growth over the next few years."
Provincial program spending grew at an unsustainable pace over the last
five years. Stimulus funding added to deficits, but governments are now
beginning to cut back. However, the provinces will find it harder to
balance their books than the federal government over the next few years
because health care costs continue to rise sharply.
Strong resource prices will make Saskatchewan and Newfoundland and
Labrador the fastest growing provincial economies in 2011. Anchored by
growth in the potash industry and steady gains in the energy sector,
Saskatchewan is poised for a period of prolonged economic prosperity.
Saskatchewan's real growth domestic product is forecast to increase by
3.9 per cent in 2011 and 4.5 per cent in 2012, which would be the
fastest growth among the provinces in both years.
Newfoundland and Labrador is expected to post growth of 3.6 per cent
this year. Solid production increases in mining, particularly nickel
and iron ore, along with high oil prices will bolster economic
activity. Unemployment is expected to drop from 14 per cent in 2010 to
11 per cent in 2012, a 40-year low.
Alberta's budget is balanced this year because it is using its
accumulated reserves to avoid a deficit. Growth in the energy sector
will support the construction, manufacturing and transportation
industries, offsetting a lackluster performance in the services sector.
The economy will grow by 2.4 per cent in 2011, and the province will
recover all the jobs lost during the recession by the end of the year.
Ontario's economy is expected to grow by 2.1 per cent this year. A
resurgence in business confidence and investment will outweigh declines
in construction spending (both residential and government
infrastructure). Exports- particularly automobiles - will continue to
grow as the U.S. consumer starts to rebound.
Manitoba is one of the few provinces forecast to post stronger growth in
2011 than in 2010. Growth will accelerate to two per cent on the
strength of improving performance in mining, manufacturing and
Post-Olympic blues will temper British Columbia's outlook-weak growth in
a number of service industries will cut real GDP growth in half to just
1.9 per cent in 2011. Continued weakness in the U.S. housing market
will hinder demand for forest products and other provincial exports.
Residential construction and government infrastructure spending will
decline this year.
In Quebec, rising taxes- part of the effort to bring its finances under
control - will cut into disposable income and households spending
power. This weakness in the domestic economy will limit real GDP growth
to 1.8 per cent in 2011.
The Maritime provinces will also be part of the trend toward weaker
economic growth in 2011. Wind electricity generation contributed to
Prince Edward Island's economy last year, and it is expected to carry
over this year, supporting growth of 2.5 per cent in 2011.
Nova Scotia's prospects over the next two years are muted. Austerity
measures by both the federal and provincial governments and limited
residential and business non-residential investment will combine to
slow real GDP growth to 1.6 per cent in 2011.
The New Brunswick government is firmly focused on eliminating the
deficit over the next four years, so the public sector will provide
limited support to growth. As governments withdraw infrastructure
spending, the construction industry will continue to struggle. New
Brunswick can expect its economy to grow by 1.3 per cent this year.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221