British Columbia's Economic Growth Solid but Downward Pressures Persist: RBC



    TORONTO, Oct. 12 /CNW/ - British Columbia's economic growth prospects
have declined slightly to 3.1 per cent in 2007, and 2.9 per cent in 2008,
according to a provincial economic outlook released today by RBC.
    "A diversified economy is key to B.C.'s solid growth picture for this
year and next," said Craig Wright, vice-president and chief economist, RBC.
"With two years to go before the flame is lit on Vancouver's 2010 Olympic and
Paralympic Winter Games, B.C.'s economy will be receiving increasingly needed
stimulus to offset downside risks related to the slowing U.S. economy."
    A modest fiscal stimulus from healthy government surpluses; B.C.'s
growing focus upon port development aimed at cashing in on Asian trade; and
strong job growth, coupled with decent wage gains that are supporting one of
the better retail sales pictures in the country, are also some of the
province's positive economic influences.
    B.C. continues to benefit from strong mineral prices that have remained
high for longer than anticipated. However, weaknesses in other resource
sectors are starting to show, as sawmill production volumes are off their 2006
peak and gas production in the Greater Sierra and Cutbank Ridge regions is
also tracking lower than last year.
    The emergence of further downward risks warrants a cautious outlook for
the next decade according to the report. Weak prices continue to weigh on
margins for the important forestry sector, and revised estimates of pine
beetle spread rates peg losses of marketable pine trees as high as 75 per cent
by the mid-point of the next decade. As well, unlike numerous other regions of
the country, there are no real major new capital initiatives that are likely
to fill the post-Vancouver 2010 void next decade.
    Across the provinces, Newfoundland and Labrador is expected to be the
growth leader this year, with Alberta moving into the lead in 2008, rivaled
only by Saskatchewan. Manitoba's steady growth and inflation rates will keep
it in the middle of the western provincial pack, and B.C.'s growth rate will
move slightly downward. RBC's forecast for Ontario's economy has been revised
downward to the bottom of the pack among all the provinces. Quebec should fare
somewhat better than Ontario next year, until currency depreciation, lower
energy prices, improvements in the U.S. economy, and capital spending lift
central Canada's manufacturers and exporters. While P.E.I.'s growth prospects
are modest, Nova Scotia and New Brunswick are well-positioned for better
long-run growth as a result of renewed prospects for several large-scale
capital projects.

    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.D.T., at
www.rbc.com/economics/market/pdf/provfcst.pdf), provincial forecast details
are as follows:

    
                   Real GDP          Housing starts       Retail sales

                                       Thousands
               07     08     09     07     08     09     07    08     09
               --     --     --     --     --     --     --    --     --
    NFLD.     7.5    0.5    1.0    2.4    2.1    1.8    9.5   6.0    2.0
    P.E.I     1.9    1.8    1.4    0.6    0.6    0.5    9.0   4.5    3.7
    N.S.      2.4    3.1    3.5    4.7    4.4    4.0    3.8   4.9    6.5
    N.B.      2.5    2.8    2.6    4.1    3.8    3.4    5.6   4.5    4.0
    QUE.      2.1    2.3    2.4   51.5   47.9   42.6    5.0   4.5    4.0
    ONT.      1.9    1.8    2.5   68.6   66.5   60.5    3.6   4.0    4.5
    MAN.      3.4    3.0    2.5    5.8    5.4    4.7    8.7   5.7    3.0
    SASK.     4.8    4.3    3.2    5.8    4.8    3.5   12.5   9.5    6.0
    ALTA.     5.0    4.5    3.0   48.5   41.2   35.0   10.5   9.8    8.5
    B.C.      3.1    2.9    2.8   37.2   32.3   26.8    7.2   6.3    8.0
    CANADA    2.7    2.5    2.6    230    210    184    6.0   5.6    5.5

                  Employment              CPI

               07     08     09     07     08     09
               --     --     --     --     --     --
    NFLD.     0.8    0.1    0.3    1.3    1.4    1.2
    P.E.I.    1.3    0.4    0.2    1.5    1.7    1.6
    N.S.      1.3    1.2    2.0    1.7    1.3    2.0
    N.B.      2.0    0.8    0.9    1.8    1.4    1.6
    QUE.      1.9    0.9    0.8    1.9    1.6    1.5
    ONT.      1.4    0.9    1.0    2.0    1.8    1.7
    MAN.      1.4    1.0    0.4    2.4    2.1    1.8
    SASK.     2.4    1.0    0.8    3.0    3.0    2.3
    ALTA.     4.9    2.0    1.8    5.4    3.3    2.8
    B.C.      3.2    1.9    2.6    2.1    2.1    2.5
    CANADA    2.2    1.2    1.2    2.3    2.0    1.9
    






For further information:

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


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