Alberta economic growth still the envy of other provinces, says RBC



    TORONTO, Jan. 11 /CNW/ - According to the latest provincial forecast
released today by RBC, Alberta's economic growth should remain well above the
national average, sitting at 3.9 per cent for 2008.
    "Alberta's economy is still among the best in the country," said Craig
Wright, senior vice-president and chief economist, RBC. "However, while
housing markets, consumer spending, fiscal surpluses and capital spending
remain elevated, Alberta's economic growth is past its peak though high oil
prices should help cushion the negative economic impacts during the year."
    Higher oil sands royalties have eaten into capital spending plans and job
creation levels, but RBC notes this deterioration would have happened
regardless of the higher royalties, given ballooning project costs over recent
years. Even at reduced levels, Alberta's capital spending plans remain higher
than other parts of Canada.
    Fiscal surpluses were a positive surprise last year, largely due to
higher income tax revenues and oil prices. Natural gas royalties still account
for roughly 50 per cent of resource revenue and prices and royalties remain
below 2005 peak levels. As well, weaker gas prices and rising costs have
sharply driven down drilling activity.
    The report also noted that extremely stressed affordability conditions
have priced many prospective homeowners out of the market and this will
sharply cool construction activity in 2008. The pace of house price gains has
cooled significantly and sales-to-new listings ratios have sharply receded,
especially in Edmonton. Nonetheless, consumer spending has been well-supported
by strong wage growth. While the key supports remain intact, consumer spending
should slow as income growth moderates alongside overall weaker economic
growth.
    Across Canada, Alberta leads all provinces with above-average economic
growth, followed by Saskatchewan and Nova Scotia. On the opposite end of the
scale, and showing a complete turnabout with its mega-projects now in
maturation, Newfoundland and Labrador is posting the slowest economic growth
rate of 0.5 per cent, and on its heels is P.E.I., as well as Quebec and
Ontario with its manufacturing woes. However, a more bullish outlook is in
store by the end of this decade for Newfoundland and Labrador, New Brunswick,
Nova Scotia and, in particular, Saskatchewan, where there is a possibility for
a triple play of diamond mining, rich uranium deposits and a massive oil
strike in the southeastern part of the province.
    The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, personal income
growth, retail sales, housing starts, and the Consumer Price Index.
    According to the report (available online as of 8 a.m. E.S.T., at
www.rbc.com/economics/market/pdf/provfcst.pdf), provincial forecast details
are as follows:

    
                        Real               Housing              Retail
                         GDP                starts               sales

                                          Thousands
                  07     08     09     07     08     09     07     08     09
                  --     --     --     --     --     --     --     --     --
    NFLD.        9.0    0.5    1.0    2.5    2.2    1.9   10.0    6.0    2.0
    P.E.I.       1.9    1.2    1.4    0.7    0.6    0.5    9.1    4.5    3.7
    N.S.         2.4    3.0    3.5    4.8    4.5    4.1    4.4    4.9    6.5
    N.B.         2.5    2.5    2.6    4.1    3.8    3.4    6.7    4.5    4.0
    QUE.         1.9    1.7    2.5   49.4   46.9   40.4    4.4    4.0    4.1
    ONT.         1.7    1.4    2.6   68.1   66.2   60.2    3.9    3.5    4.7
    MAN.         3.4    3.1    2.5    5.7    5.7    5.0    9.0    5.3    3.4
    SASK.        4.6    3.8    3.3    5.9    6.1    4.5   12.2    8.5    6.5
    ALTA.        4.3    3.9    3.2   48.3   38.6   35.2    9.7    9.0    8.2
    B.C.         3.0    2.5    3.0   38.6   35.2   28.5    7.1    6.0    7.5
    CANADA       2.6    2.1    2.7    228    210    184    5.9    5.1    5.5


                     Employment              CPI

                  07     08     09     07     08     09
                  --     --     --     --     --     --
    NFLD.        0.7    0.1    0.3    1.5    1.0    1.2
    P.E.I.       1.3    0.4    0.2    1.8    1.3    1.6
    N.S.         1.3    1.8    2.0    1.9    1.1    2.0
    N.B.         1.9    1.7    0.9    2.0    1.2    1.6
    QUE.         2.2    1.2    0.9    1.6    1.1    1.6
    ONT.         1.6    1.0    1.1    1.9    1.0    1.7
    MAN.         1.5    1.2    1.5    2.2    1.7    1.6
    SASK.        2.3    1.6    0.8    3.0    2.4    2.4
    ALTA.        4.8    2.0    1.8    5.1    2.9    2.6
    B.C.         3.2    1.9    2.6    1.8    1.4    2.2
    CANADA       2.3    1.3    1.4    2.1    1.4    1.9
    





For further information:

For further information: Craig Wright, RBC Economics, (416) 974-7457;
Derek Holt, RBC Economics, (416) 974-6192; Amy Goldbloom, RBC Economics, (416)
974-0579; Jackie Braden, RBC Media Relations, (416) 974-2124


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