RBC says diversification key to Saskatchewan's strong economy



    TORONTO, Oct. 12 /CNW/ - Saskatchewan's economy continues to strengthen
and is expected to grow by 4.8 per cent in 2007, and 4.3 per cent in 2008,
according to a provincial economic outlook released today by RBC.
    "Saskatchewan has diversified its economic activities over the past
several years, so that it is now vying with Alberta for the title of Canada's
growth leader," said Craig Wright, vice-president and chief economist, RBC.
"Nationally, the province ranks second in oil production and third in natural
gas production and its list of economic achievements continues to broaden by
the minute."
    Activity in the uranium and diamond mining sectors has dominated the
province's surge in mineral exploration and development spending over the past
few months. Saskatchewan's resources sector will continue to accelerate early
next decade when the flooded Cigar Lake mine opens in 2011 and two large
diamond mines swing into production.
    According to the RBC report, much of the province's economic strength is
also spilling over into increased consumer spending and a hot housing market.
This is especially true for Saskatoon, as the introduction of direct chartered
flights to and from Fort McMurray has made the city a more viable housing
option for oil sands workers.
    However, Saskatchewan's economic excitement must be put into perspective,
notes the report. There are a number of risks to consider such as a decline in
potash and grain prices, slowing global demand for biofuels; strained housing
affordability conditions that may price first time buyers out of the market; a
potential correction to overvalued oil prices; and a growth picture that
remains as vulnerable to agricultural conditions today as in the past, despite
some progress toward diversification.
    Across the provinces, Newfoundland and Labrador is expected to be the
growth leader this year, with Alberta moving into the lead in 2008, rivaled
only by Saskatchewan. Manitoba's steady growth and inflation rates will keep
it in the middle of the western provincial pack, and B.C.'s growth rate will
move slightly downward. RBC's forecast for Ontario's economy has been revised
downward to the bottom of the pack among all the provinces. Quebec should fare
somewhat better than Ontario next year, until currency depreciation, lower
energy prices, improvements in the U.S. economy, and capital spending lift
central Canada's manufacturers and exporters. While P.E.I.'s growth prospects
are modest, Nova Scotia and New Brunswick are well-positioned for better
long-run growth as a result of renewed prospects for several large-scale
capital projects.
    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
                  07     08     09     07     08     09     07     08     09
                  --     --     --     --     --     --     --     --     --
    NFLD.        7.5    0.5    1.0    2.4    2.1    1.8    9.5    6.0    2.0
    P.E.I        1.9    1.8    1.4    0.6    0.6    0.5    9.0    4.5    3.7
    N.S.         2.4    3.1    3.5    4.7    4.4    4.0    3.8    4.9    6.5
    N.B.         2.5    2.8    2.6    4.1    3.8    3.4    5.6    4.5    4.0
    QUE.         2.1    2.3    2.4   51.5   47.9   42.6    5.0    4.5    4.0
    ONT.         1.9    1.8    2.5   68.6   66.5   60.5    3.6    4.0    4.5
    MAN.         3.4    3.0    2.5    5.8    5.4    4.7    8.7    5.7    3.0
    SASK.        4.8    4.3    3.2    5.8    4.8    3.5   12.5    9.5    6.0
    ALTA.        5.0    4.5    3.0   48.5   41.2   35.0   10.5    9.8    8.5
    B.C.         3.1    2.9    2.8   37.2   32.3   26.8    7.2    6.3    8.0
    CANADA       2.7    2.5    2.6    230    210    184    6.0    5.6    5.5

                     Employment              CPI

                  07     08     09     07     08     09
                  --     --     --     --     --     --
    NFLD.        0.8    0.1    0.3    1.3    1.4    1.2
    P.E.I        1.3    0.4    0.2    1.5    1.7    1.6
    N.S.         1.3    1.2    2.0    1.7    1.3    2.0
    N.B.         2.0    0.8    0.9    1.8    1.4    1.6
    QUE.         1.9    0.9    0.8    1.9    1.6    1.5
    ONT.         1.4    0.9    1.0    2.0    1.8    1.7
    MAN.         1.4    1.0    0.4    2.4    2.1    1.8
    SASK.        2.4    1.0    0.8    3.0    3.0    2.3
    ALTA.        4.9    2.0    1.8    5.4    3.3    2.8
    B.C.         3.2    1.9    2.6    2.1    2.1    2.5
    CANADA       2.2    1.2    1.2    2.3    2.0    1.9
    





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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