Modest growth expected for Quebec's economy in 2007, says RBC



    MONTREAL, March 30 /CNW/ - Quebec's economy is expected to grow by a
modest 2.1 per cent in 2007, according to the latest provincial economic
outlook released today by RBC.
    "In 2006, Quebec's economic growth was below the national average and
this will continue for 2007," said Craig Wright, vice-president and chief
economist, RBC. "However, growth will remain steady albeit soft, with several
factors such as stimulative fiscal policy and strength in business investments
helping to provide economic support."
    According to the RBC report, Quebec's diverse manufacturing sector helped
offset further drags on growth with a three per cent gain in manufacturing
shipments in 2006. RBC forecasts that conditions should remain positive for
key industries such as aerospace and primary metals, specifically aluminum, in
2007.
    Quebec will also get economic support through increased federal
transfers. "If Quebec's budget is passed in its current form, it will add
further stimulus, including a pay equity deal that will single-handedly add
about a quarter point to near term economic growth," added Wright.
    RBC notes that like other parts of Canada, Quebec should see considerable
strength in business investment offset a cooler housing market. Manufacturing
investment will be further strengthened due to accelerated Capital Cost
Allowance (CCA) rates introduced by the federal budget. Two year write-offs
for equipment spending, and more than doubling the CCA rate for investments in
buildings and computers, will add to capital project strength this year and
help offset an expected deceleration next year before big projects kick into
high gear in 2009.
    For the overall Canadian economy, RBC forecasts that the gap between
growth in the more heavily resource based provinces and central Canada will
narrow over 2007-08. Newfoundland and Labrador will be the leader this year
with growth of four per cent followed by Alberta at 3.6 per cent. Prince
Edward Island and Ontario will be at the back of the pack, each with growth
rates of about two per cent.
    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                Housing              Retail
                     GDP                 starts               sales

                                        Thousands
               06     07     08     06     07     08     06     07     08
               --     --     --     --     --     --     --     --     --
    NFLD.     3.5    4.0    1.5    2.2    2.1    2.0    2.9    2.0    2.0
    P.E.I     1.9    1.9    1.7    0.7    0.7    0.7    4.0    2.1    2.1
    N.S.      2.4    2.4    2.3    4.9    4.5    4.4    6.3    3.5    3.0
    N.B.      2.5    2.4    2.6    4.1    3.8    3.9    5.5    3.2    3.2
    QUE.      2.0    2.1    2.7   47.9   42.1   43.0    4.6    4.1    4.0
    ONT.      1.3    2.0    3.1   73.4   66.8   67.7    4.0    4.2    5.8
    MAN.      3.4    2.7    2.9    5.0    4.5    4.3    5.8    4.2    4.1
    SASK.     3.6    2.8    2.9    3.7    3.4    3.3    5.9    5.0    4.5
    ALTA.     6.5    3.6    3.2   49.0   44.0   41.4   16.0    9.3    8.0
    B.C.      4.7    3.4    3.4   36.4   33.9   33.8    6.2    6.6    6.3
    CANADA    2.7    2.5    3.0    229    207    206    6.2    5.2    5.2


                  Employment              CPI

               06     07     08     06     07     08
               --     --     --     --     --     --
    NFLD.     0.7    0.5    0.1    1.8    1.2    1.4
    P.E.I.    0.6    0.6    0.4    2.2    1.0    1.3
    N.S.     -0.3    0.8    0.3    2.1    1.3    1.3
    N.B.      1.4    1.2    0.4    1.6    1.1    1.4
    QUE.      1.3    1.2    0.9    1.7    0.8    2.2
    ONT.      1.5    1.4    1.2    1.8    1.0    2.4
    MAN.      1.2    0.8    0.6    1.9    0.9    1.8
    SASK.     1.7    2.1    0.8    2.0    1.2    2.0
    ALTA.     4.8    3.8    1.6    3.9    3.0    2.6
    B.C.      3.1    3.0    2.0    1.8    1.9    2.8
    CANADA    2.0    1.8    1.2    2.0    1.7    2.4
    





For further information:

For further information: Craig Wright, RBC Economics, (416) 974-7457;
Derek Holt, RBC Economics, (416) 974-6192; Raymond Chouinard, RBC Media
Relations, (514) 874-6556


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