TORONTO, Feb. 21 /CNW/ - In addition to solid support from investment
spending, the Atlantic provinces will be powered by the strength in the energy
and mining sectors, according to Scotia Economics' latest Provincial Trends
"New Brunswick is expected to lead the Atlantic provinces with
broad-based growth of 2.2 per cent in 2008, with contributions from sizeable
construction activity, and vibrant mining and service sectors," says David
Hamilton, Economist, Scotiabank. "The forestry sector continues to
consolidate, while the seafood sector faces increased foreign competition
alongside the high Canadian dollar."
Solid construction activity and robust growth in the mining and service
sectors should boost Nova Scotia's economy by two per cent in 2008. Natural
gas production is likely to remain flat this year following a sizeable
increase in 2007. The service sector should benefit from sizeable employment
gains due to a number of new office openings.
Prince Edward Island is expected to witness modest growth of 1.5 per cent
this year, due in part to a lack of new major construction projects on the
horizon. A strong loonie will continue to impact the fishing industry and
potato harvesting efforts in the province. Tourism will remain a strong point
for the service sector.
"Economic growth should subside for Newfoundland & Labrador in 2008, with
the slowing in construction activity dragging growth down to 1.2 per cent,"
says Mr. Hamilton. "In coming years, the outlook for offshore activity is very
positive, given a number of expansion projects. Moreover, sizeable capacity
additions are planned for the mining sector. A slowing in net interprovincial
out-migration and sizeable personal income tax cuts are supportive for
According to the report, a combination of factors, heightened foreign
competition, a soaring loonie, and more recently, a weakening U.S. economy,
are restraining Canada's overall economic performance, with the manufacturing
sector bearing the brunt of the slowdown. National output growth is expected
to decelerate from an average of 2.6 per cent in 2007 to 1.9 per cent in 2008.
At the same time, however, non-residential construction and ongoing
strength in service industries are providing enough forward momentum across
the provinces to offset these headwinds. Construction activity, in particular,
is receiving solid support from both private and public sectors, mainly for
spending on infrastructure.
Federal, provincial and municipal governments have announced significant
multi-year infrastructure investments. Faced not only with the need to upgrade
roads, bridges and water treatment systems, Canada is also challenged by a
growing economy and population base. At the provincial level, British
Columbia, Ontario and Quebec propose ambitious longer-term transit
development. Alberta faces a critical need to upgrade the infrastructure
surrounding the oil sands. Quebec is spending a substantial amount on
super-hospital projects, as well as investing in power generation and
transmission facilities. On the East coast, the Atlantic Gateway initiative
aims to increase port activity alongside an improved transportation network.
"Although most provinces are expected to witness some softening in growth
in 2008, there will continue to be significant regional disparities between
the Western, Central and Atlantic provinces," says Mr. Hamilton.
Regionally, the West will continue to lead with average growth of three
per cent, underpinned by the booming energy and mining sectors. Central
Canada, mired by weakness in its export-oriented manufacturing sectors, will
trail the national average with 1.4 per cent growth in 2008. Similar to the
West, average growth of 1.8 per cent in the Atlantic provinces will be
supported by the continuing resource boom.
Scotia Economics provides clients with in-depth research into the factors
shaping the outlook for Canada and the global economy, including macroeconomic
developments, currency and capital market trends, commodity and industry
performance, as well as monetary, fiscal and public policy issues.
For further information:
For further information: David Hamilton, Scotia Economics, (416)
866-4212, firstname.lastname@example.org; Patty Stathokostas, Scotiabank
Public Affairs, (416) 866-3625, email@example.com