TORONTO, Dec. 13, 2012 /CNW/ - Rebounding agricultural production and stronger grain prices will
contribute to a marked improvement in Manitoba's farm incomes into
2013, according to the latest RBC Economics Provincial Outlook released
today. RBC forecasts that the strength in agriculture will be a key
driver of the projected 2.9 per cent real GDP growth in 2012, up from
2.0 per cent in 2011.
Following double-digit declines over the past two years, Manitoba's
agricultural output will rise significantly, by an expected 17 per
cent, in 2012 thanks to improved weather conditions. This strong
increase has been revised down slightly relative to last quarter
reflecting indications of a smaller canola harvest. The expected
overall jump in agricultural output will coincide with production
problems elsewhere in the world and result in strong gains in prices
for grains and oilseed.
RBC notes the pace of growth in the agricultural sector is likely to
slow dramatically next year to around four per cent as activity is no
longer rebounding from depressed levels. Additionally, with U.S.
agricultural output expected to recover from drought conditions, grain
and oilseed prices will likely retrace some of their recent gains,
weighing on farm income growth as the year progresses.
"In Manitoba, greater strength in manufacturing is expected to offset
the expected slowdown in the agriculture in 2013," said Craig Wright,
senior vice-president and chief economist, RBC. "This is expected to
reflect improved demand for key provincial manufacturing exports as the
U.S. recovery gains strength through the forecast."
RBC also assumes solid gains in the mining and oil and gas sector, with
increases matching recent average gains close to four per cent in both
2013 and 2014. Though this represents downward revisions from earlier
projections, reflecting indications of weaker-than-expected global
growth, demand for natural resources are expected to remain strong. As
firms expand production capacity, rising business investment will be a
key factor supporting Manitoba's real GDP growth forecast of three per
cent in 2014.
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 of 8 a.m. ET today at rbc.com/economics/market/pdf/provfcst.pdf.
For further information:
Craig Wright, RBC Economics Research, 416 974-7457
Paul Ferley, RBC Economics Research, 416 974-7231
Elyse Lalonde, Corporate Communications, RBC Capital Markets, 416 842-5635