Quebec's economic growth to remain soft in 2007, says RBC



    Challenges persist for manufacturing sector

    MONTREAL, June 22 /CNW/ - Quebec's economy is expected to grow by
2.1 per cent in 2007 and 2.6 per cent in 2008, according to the latest
provincial economic outlook released today by RBC.
    "Quebec's economic growth continues to underperform relative to the
national average," said Craig Wright, vice-president and chief economist, RBC.
"Several factors are weighing on near-term growth and we don't expect a
material acceleration in the economy until 2009 when big ticket capital
projects pick up speed."
    According to the report, Quebec's manufacturing sector will continue to
face the downward pressures of a strong Canadian dollar, elevated oil prices
and overseas competition. However, in contrast to Ontario, Quebec
manufacturers continue to fare better across many key sectors, particularly in
the durables sector.
    The clothing, textiles, and wood products sectors remain vulnerable to
competition from China. "We expect the manufacturing sector to remain weak
through the remainder of the year but considerable strength in business
investment will provide an offset," added Wright.
    On a positive note, central Canada's manufacturing base could gain
support in 2008 from a rebound in the U.S. economy alongside a pick up in U.S.
home construction, a modestly weaker dollar and an anticipated recovery in
global air travel and aerospace orders. In addition, $950 million in tax cuts
combined with a pay equity deal will single handedly add at least one-quarter
percentage point to near-term growth.
    Across Canada, Newfoundland and Labrador will be the provincial growth
leader in 2007 at 7.5 per cent before experiencing a dramatic pull back next
year, shifting the spotlight back onto the more sustainable growth in Western
Canada. Prince Edward Island and Ontario will be at the back of the pack, each
with growth rates just shy of two per cent this year.

    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
                  06     07     08     06     07     08     06     07     08
                  --     --     --     --     --     --     --     --     --
    NFLD.        2.8    7.5    0.5    2.2    2.0    1.8    2.9    5.5    2.0
    P.E.I        2.0    1.9    1.7    0.7    0.6    0.6    4.1    4.5    3.7
    N.S.         1.1    2.4    2.3    4.9    4.5    4.4    6.3    3.1    3.3
    N.B.         2.6    2.5    2.6    4.1    3.8    3.7    5.5    3.9    4.0
    QUE.         1.7    2.1    2.6   47.9   42.1   39.6    4.5    4.7    4.8
    ONT.         1.9    1.9    2.7   73.4   63.9   60.0    4.0    3.5    4.9
    MAN.         3.3    3.0    3.2    5.0    5.3    4.4    5.8    6.1    6.0
    SASK.        0.4    4.0    3.6    3.7    4.6    3.9    5.9    7.4    6.0
    ALTA.        6.8    4.6    4.0   49.0   44.8   39.9   16.0    9.3    8.5
    B.C.         3.6    3.2    3.3   36.4   35.3   31.1    6.2    6.0    5.8
    CANADA       2.8    2.6    2.9    228    208    190    6.2    5.2    5.2


                     Employment              CPI

                  06     07     08     06     07     08
                  --     --     --     --     --     --
    NFLD.        0.7    1.2    0.1    1.8    2.0    1.4
    P.E.I        0.6    0.8    0.4    2.3    1.5    1.7
    N.S.        -0.3    1.1    0.3    2.0    1.4    1.3
    N.B.         1.4    0.8    0.4    1.7    1.5    1.4
    QUE.         1.3    2.0    0.9    1.7    2.3    1.8
    ONT.         1.5    1.3    1.0    1.8    2.1    2.1
    MAN.         1.2    1.1    0.9    2.0    2.3    2.5
    SASK.        1.7    3.0    1.0    2.1    3.5    2.8
    ALTA.        4.8    4.2    2.0    3.9    5.2    3.5
    B.C.         3.1    3.0    1.9    1.7    2.2    2.3
    CANADA       2.0    2.0    1.2    2.0    2.4    2.2
    





For further information:

For further information: Jimmy Jean, RBC Economics, (416) 974-6525;
Craig Wright, RBC Economics, (416) 974-7457; Raymond Chouinard, RBC Media
Relations, (514) 874-6556; Jimmy Jean sera disponible pour des commentaires en
français


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