TORONTO, Sept. 22, 2015 /CNW/ - Manitoba is expected to remain one of
the leading provinces for economic growth in 2015, despite a downward
revision in real GDP growth to 2.3 per cent from the 2.8 per cent
projected in June, according to the latest Provincial Outlook issued today by RBC Economics. RBC projects real GDP growth for 2016 to
fall marginally lower to 2.7 per cent from the previously projected 2.8
"Although Manitoba's economic growth is expected to slow slightly
compared to our previously projected outlook, the province is still on
track to outpace national growth this year and next," said Craig
Wright, senior vice-president and chief economist, RBC. "The downward
revision for 2015 largely reflects indications of weak manufacturing
activity over the first half of this year; however, this is being
tempered by greater strength in agriculture and a rise in capital
The manufacturing sector's weakness in the first and second quarters was
most evident in machinery and fabricated metal manufacturing, which
more than offset significant strength in transportation equipment and
furniture exports. RBC says these areas of weakness may in part reflect
a knock-on effect from declining activity in the energy sector in
Saskatchewan and Alberta.
"Recent indicators show that export strength is building in the province
and nationally. We believe rising external demand will represent a
greater pull for Manitoba's manufacturing sector offsetting reduced
demand for energy-related industries," added Wright.
RBC's forecast assumes 2 per cent growth in the manufacturing sector as
a whole for 2015. This is down from the 4 per cent projected in June,
but it is expected to accelerate in 2016 to 4 per cent, though down
from the 5.5 per cent previously projected.
Although drought conditions have prevailed elsewhere in the prairies,
Manitoba managed to enjoy normal levels of precipitation. Initial crop
estimates provided by Statistics Canada in August confirm this and
suggest that aggregate production of the province's two major crops,
wheat and canola, will be up 15 per cent this year, following a decline
of 26 per cent in 2014.
"Assuming persistent favourable growing conditions in 2016, continued
growth is expected, though at a much more muted pace relative to this
year. The agriculture sector as a whole is expected to rise 5.5 per
cent this year while moderating to less than 2 per cent in 2016," added
Growth in the province this year will also be supported by a rise in
capital spending, as Statistics Canada CAPEX survey suggests that capital spending in Manitoba will increase by 5
per cent. While this is down from a 25 per cent increase in 2014, it is
in contrast to declining activity for the country as a whole due to
energy sector cutbacks.
"Despite disappointing manufacturing sales to date this year, the sector
is planning on increasing capital expenditures in 2015 by 6 per cent on
top of a massive 36 per cent gain in 2014 - this implies confidence in
the sector and that stronger demand will eventually emerge, with firms
adding capacity to be ready to respond," said Wright.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 8 a.m. ET today.
For further information:
Craig Wright, RBC Economics Research, 416-974-7457
Paul Ferley, RBC Economics Research, 416-974-7231
Romina Mari, Communications, RBC Capital Markets, 416-974-3558