TORONTO, Sept. 22, 2015 /CNW/ - Lacklustre activity across several
sectors in Quebec resulted in the province's economy softening this
past spring. However, this is expected to be just a short detour on the
way to stronger growth in the period ahead, according to the latest Provincial Outlook issued today by RBC Economics. RBC downgraded its projection for
Quebec's annual real GDP growth to 1.3 per cent in 2015 from 1.8 per
cent forecasted in June. Still, RBC expects the province's economy to
re-accelerate in 2016 to a rate of 1.9 per cent.
"Following a period of encouraging economic growth in the early months
of 2015, disappointing signs emerged this spring in Quebec, which are
expected to taint the province's growth outlook for the year as a
whole," said Craig Wright, senior vice-president and chief economist,
RBC. "Nonetheless, we believe this soft patch will be temporary and
that activity in Quebec will find a stronger footing in the latter half
of the year."
This year started reasonably well for Quebec, with the Institut de la statistique du Québec suggesting that the province's real GDP accelerated to an annualized
growth rate of 1.6 per cent in the first quarter of 2015, up from an
average of 1.3 per cent in the second half of 2014. Moreover, the
first-quarter growth occurred at a time when Canada's real GDP
registered a decline of 0.8 per cent. Still, momentum in Quebec's
economy sputtered this spring when activity softened in a number of key
RBC notes that setbacks in Quebec's manufacturing sector, utilities, and
continued weakness in the province's construction sector, particularly
on the non-residential side, were among factors restraining growth this
past spring. While some offset came from slightly stronger activity in
the services sector, gains in this area were slim at best.
"While non-residential construction may remain stagnant for a little
while longer, we expect housing construction to strengthen in the
period ahead," added Wright. "This, in tandem with a renewed vigour in
the home resale market, is expected to make a positive contribution to
Quebec's economy moving forward."
RBC expects Quebec's economy to accelerate during the remainder of this
year and into 2016 thanks in large part to improving external trade
prospects. The report indicates that continuing strength in the U.S.
economy and a lower value of the Canadian dollar are poised to
stimulate demand for Quebec's exports and, therefore, activity in the
manufacturing and other export-dependent sectors, such as tourism. In
fact, the report notes that despite softening this spring, Quebec's
real merchandise exports were up a solid 6.6 per cent year-over-year
during the first six months of 2015, which suggested traction in the
rotation toward external sources of growth in the province.
On the employment side, RBC anticipates sustained, albeit modest, gains
in the Quebec labour market. RBC projects employment to grow by 1 per
cent in 2015 and 0.8 per cent in 2016, which would be a welcome
improvement from a complete stalling of job growth 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 as of 8 a.m. ET today.
For further information:
Craig Wright, RBC Economics Research, 416-974-7457
Robert Hogue, RBC Economics Research, 416-974-6192
Romina Mari, Communications, RBC Capital Markets, 416-974-3558