Saskatchewan economy tops provincial rankings, says RBC



    Impact of recession more muted than elsewhere

    TORONTO, June 15 /CNW/ - While Saskatchewan remains the provincial growth
leader in Canada, the U.S. and global recessions are nonetheless taking a toll
on performance, according to the latest provincial forecast released today by
RBC.
    "Saskatchewan has been ahead of the pack in terms of economic growth
since last year, but the province will show a significant slowdown as the
global storm takes the steam out of mineral production and the labour market,"
said Craig Wright, senior vice-president and chief economist, RBC. "We
anticipate that Saskatchewan's overall GDP growth will moderate to 0.7 per
cent this year, still a notably better showing than elsewhere in the country."
    According to the report, there is weakened demand for various raw
materials, with potash production plunging 53 per cent in the first quarter of
this year, relative to the same period in 2008. In addition, the unemployment
rate rose from its recent low of 3.8 per cent in November 2008 to 4.9 per cent
in May 2009, despite ongoing job gains on a year-over-year basis. Saskatchewan
continues to benefit from positive net inter-provincial migration, which
reflects Saskatchewan's relatively bright economic prospects.
    While solid non-residential construction activity will be supplemented by
the infrastructure spending ramp-up recently announced by the provincial
government, performance of the overall construction sector is expected to be
tempered by the projected cooling of residential activity. RBC forecasts that
housing starts in Saskatchewan will be more than halved this year - dropping
to 3,300 in 2009 from 6,800 in 2008 - before modestly reviving to 3,700 units
next year, as the general economic environment improves.
    With the U.S. economy anticipated to initiate a recovery by the latter
half of this year and be sustained in 2010, demand for key Saskatchewan export
products - including potash, grains, uranium and oil - should improve next
year.
    "We forecast a boost in income and continued strong business investment,
both of which will contribute to further strengthening Saskatchewan's growth,
albeit modestly, to 2.8 per cent in 2010," added Wright.
    The main theme of the RBC Provincial Outlook is that tremendous weakness
late last year and early this year has prompted a downward revision to real
GDP growth forecasts across the board for 2009. Recent developments lend
support to RBC's view that a general recovery will be established by the
second half of 2009 and sustained in 2010. In 2009, expectations are that the
economies of only three provinces - Saskatchewan, Manitoba and Nova Scotia -
will grow, while all other provincial economies will contract. Ontario (deep
troubles in the auto sector) and Newfoundland and Labrador (sharp drop in
mineral and oil production) are taking the biggest hits, with Alberta
(cutbacks in business and residential investment) being the other province
showing above-average decline in activity. However, RBC continues to project
that growth will return to all provinces next year.
    The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales and
housing starts.
    According to the report (available online as of 8 a.m. EDT today, at
www.rbc.com/economics/market/pdf/provfcst.pdf), provincial forecast details
are as follows:

    
                      Real GDP         Housing starts         Retail sales

                   Y/Y % Change          Thousands            Y/Y % Change
                08     09     10      08     09     10      08     09     10
                --     --     --      --     --     --      --     --     --

    N.& L.    -0.1   -3.5    3.0     3.2    3.2    3.0     7.6    0.1    4.8

    P.E.I      0.9   -1.8    2.0     0.7    0.5    0.7     5.6   -1.3    4.1

    N.S.       2.0    0.2    2.5     4.3    3.2    3.5     4.2   -2.8    4.5

    N.B.       0.0   -0.5    2.7     4.2    3.5    3.5     5.9   -2.2    4.1

    QUE.       1.0   -1.6    2.3    47.9   38.9   37.0     5.1   -1.5    4.5

    ONT.      -0.4   -3.4    2.2    75.6   52.7   65.0     3.5   -3.0    4.2

    MAN.       2.4    0.5    2.8     5.6    3.9    5.3     7.2   -2.6    5.4

    SASK.      4.4    0.7    2.8     6.8    3.3    3.7    10.6   -1.9    5.8

    ALTA.     -0.2   -2.5    2.9    29.0   16.7   28.0    -0.1   -7.8    5.7

    B.C.      -0.3   -1.9    2.9    34.3   14.7   23.0     0.3   -6.5    5.9

    CANADA     0.4   -2.4    2.5     211    141    173     3.4   -3.7    4.8


                    Employment        Unemployment rate

                   Y/Y % Change               %
                08     09     10      08     09     10
                --     --     --      --     --     --

    N.& L.     1.5   -2.6    1.1    13.2   14.7   14.8

    P.E.I      1.3   -2.3    1.0    10.7   12.5   12.6

    N.S.       1.2   -0.4    1.0     7.7    9.3    9.6

    N.B.       0.9   -0.5    0.6     8.6    9.5   10.3

    QUE.       0.8   -1.0    1.1     7.2    8.8    9.4

    ONT.       1.4   -2.6    1.0     6.5    9.3    9.9

    MAN.       1.7   -0.1    1.3     4.1    5.1    5.6

    SASK.      2.2    1.5    1.2     4.1    5.2    5.7

    ALTA.      2.7   -1.0    1.4     3.6    6.4    6.7

    B.C.       2.1   -2.5    2.1     4.6    7.8    7.8

    CANADA     1.5   -1.7    1.3     6.1    8.5    9.0
    





For further information:

For further information: Craig Wright, RBC Economics, (416) 974-7457;
Paul Ferley, RBC Economics, (416) 974-7231; Stephanie Lu, RBC Media Relations,
(416) 974-5506


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