Quebec's economy to pick up steam in 2016

OTTAWA, March 8, 2016 /CNW Telbec/ - Quebec's economic growth is expected to improve as federal government stimulus and stronger exports help lift economic growth to 1.7 per cent this year, according to The Conference Board of Canada's Provincial Outlook: Winter 2016.

"The Quebec economy has struggled to gather momentum amid declining business investment," said Marie-Christine Bernard, Associate Director, Provincial Forecast. "Going forward, stronger U.S. consumer demand should help revive Quebec's export-oriented manufacturing activity, but a turnaround in corporate investment is key to improving the trade performance."

Highlights

  • Quebec's real GDP growth is forecast to hit 1.7 per cent in 2016 thanks to federal government stimulus and stronger exports.
  • U.S. consumer demand will help revive Quebec's manufacturing activity.
  • Employment in the province is poised to increase by 1 per cent in 2016.

Despite improved conditions for manufacturers, exports grew only modestly last year. This year, robust U.S. household consumption and the weak Canadian dollar will combine to boost Quebec's export-oriented manufacturing industry by 2 per cent. Specifically, exports are on track to increase by 2.6 per cent in 2016, up from a 1.6 per cent gain last year. This will help support business investment in Quebec, which is expected to rebound into positive territory and post 0.7 per cent growth this year. However, if investment fails to pick up as expected, that could hurt export prospects in the foreseeable future.

With employment poised to increase by 1 per cent in 2016, household disposable income growth is expected to remain healthy. This will support wholesale and retail trade, which is forecast to grow by 2.1 per cent this year. However, hampered by a climate of fiscal restraint by the provincial government, non-commercial services, which includes education and health care, as well as public administration, will see little growth until 2017.

Despite a decline in housing starts, Quebec's construction industry is expected to grow by 2.3 per cent thanks to public spending on infrastructure. Work will continue on the modernization of the Champlain Bridge until the end of 2019 ($4.2 billion has been committed), as well as on the $3.7 billion Turcot Interchange until the end of 2020. Additional money from the federal government could bolster the construction sector even more.

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SOURCE Conference Board of Canada

Image with caption: "Real GDP by province in 2016 (CNW Group/Conference Board of Canada)". Image available at: http://photos.newswire.ca/images/download/20160308_C5766_PHOTO_EN_637065.jpg

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