Ontario's economy expected to rebound: RBC Economics



    TORONTO, March 30 /CNW/ - Ontario's economy will start to rebound in
2007, after being weighed down by a struggling manufacturing sector over the
past year, according to a new provincial forecast released today by RBC.
    "Weaker commodity prices and a stabilized Canadian dollar will help boost
the province's economic growth to two per cent in 2007," said Craig Wright,
vice-president and chief economist, RBC. "A fuller recovery is anticipated for
2008 as growth should return to a healthy pace of 3.1 per cent."
    Manufacturing continued to struggle as January shipment numbers declined,
especially in the transportation equipment sector, which accounts for
one-third of Ontario's shipments. Acknowledging the difficulties felt by
manufacturers and processors, the recent federal budget offered some relief.
It implemented a temporary measure that allows manufacturers a two-year
write-off on new investment in equipment acquired before 2009 and has
increased the capital cost allowance for buildings and computers. "The result
may well increase capital expenditure spending," said Wright.
    The report also noted that unlike the federal spending spree, Ontario's
2007 budget did not provide significant additional stimulus to the Ontario
economy. The province's businesses were also hit by a 28 per cent hike in the
minimum wage by 2010, despite already having the highest rate in the country
and evidence that higher minimums destroy jobs for less skilled workers.
    "Given the low-balled revenue and economic growth assumptions made by the
provincial government, we could see additional off-budget spending in light of
the looming October election," added Wright.
    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; Jackie Braden, RBC Media Relations,
(416) 974-2124


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