Newfoundland & Labrador's 2010 growth highest in the country
TORONTO, Dec. 15 /CNW/ - Despite the deep impact of the recession and
the resulting unfavourable economic environment that swept the nation,
Atlantic Canada is projected to experience overall growth at varying
degrees, according to the latest Provincial Outlook issued today by RBC
"All Atlantic provinces are poised for growth in 2010, though there are
some headwinds on the horizon making the pace of growth generally
slower than the national average," noted Craig Wright, senior
vice-president and chief economist, RBC. "A notable economic bright
spot for 2010 is an extra spring in Newfoundland & Labrador's step as
the province will yield the highest growth in the country."
Newfoundland & Labrador is bouncing back quite nicely from the deep 10.2
per cent dive in real GDP it took in 2009. Strong gains in crude oil
and mining production and in construction activity have driven a rapid
recovery in the province with RBC forecasting growth of 5.0 per cent in
2010 which constitutes the highest real GDP among the provinces.
"Newfoundland & Labrador's economy is greatly benefiting from a much
needed boost to its key energy sector as well as the broad recovery in
commodity prices and improving outlook for commodity demand," noted
Wright. "Employment prospects also continue to improve which is
fuelling income growth and supporting retail spending and residential
RBC expects that the provincial economy will maintain its positive
trajectory into 2011. Strong capital investment and further gains in
the mineral extraction sector will contribute to provincial growth
remaining strong at 3.8 per cent; however, this momentum is expected to
moderate slightly to a more sustainable pace of 2.6 per cent for 2012.
Throughout 2010, New Brunswick largely reversed the negative effects
from the recession when weak commodities injured the export market. RBC
expects real GDP to expand by 2.3 per cent with export growth in the
province likely leading the nation in 2010.
The province's manufacturing sector continues to rebound strongly from
last year's depressed levels, driven by improved demand and favourable
pricing for food, energy and forest products. However, construction
activity has eased during 2010 and there are indications that this
trend will continue into 2011. The Point Lepreau Nuclear Plant
refurbishment and the provincial infrastructure stimulus plan are
expected to wind down in early 2011, although the construction sector
will find some support from the continuation of a potash mine expansion
and increased spending on the Route 1 Gateway expansion.
"As the global economy continues to improve in 2011, we anticipate a
boost in demand for New Brunswick's goods and services and continued
job creation which should in turn increase consumer spending. However,
further easing in private non-residential investment and fiscal
restraint will hinder growth," said Craig Wright, senior vice-president
and chief economist, RBC. "These counteracting forces will help to keep
the pace of growth at a 1.9 per cent next year."
RBC notes that expected start of production at the expanded Sussex
potash mine in 2012 should provide a boost to New Brunswick's mining
sector and contribute to growth accelerating to 2.3 per cent in 2012.
After navigating the financial crisis better than the majority Canada,
Nova Scotia's economy is showing considerable relative weakness and is
forecast to expand at a modest rate of 1.8 per cent for 2010.
The provincial trade balance is currently undergoing friction with lower
energy production being compounded by a 30 per cent decline in natural
gas prices since June. Strong momentum in industrial and commercial
non-residential building construction has provided major support for
the economy, climbing 16 per cent year-over-year in real terms. Yet,
construction is anticipated to slow amid fading infrastructure stimulus
"Provincial exports will receive a substantial boost in 2011 from the
start of production at the Deep Panuke natural gas project and tourism
is expected to pick up thanks to the 2011 Canada Winter Games," said
Wright. "Still, unstable conditions in the domestic economy will create
a powerful drag easing real GDP to 1.5 per cent in 2011."
Increased energy production and a firmer global economy should
contribute to a modest re-acceleration in growth the following year,
with RBC expecting Nova Scotia's economy to expand by 2.0 per cent in
The construction sector has been a key source of strength for Prince
Edward Island's economy so far this year, but there are signs of easing
with real industrial and commercial building construction down 38 per
cent during the first three quarters of 2010.
Durable goods shipments in the province have been down 10 per cent
year-to-date compounding the continued weakness in food manufacturing.
The agri-food sector, which accounts for more than half of the
provincial merchandise exports, continues to struggle with weakened
U.S. demand. Island tourism however, posted a strong summer season up
3.7 per cent in the third quarter helping support growth in
service-sector employment and boost retail spending.
"Growth in PEI will accelerate to 2.2 per cent in 2011 as plans to
increase spending will provide a solid base for stronger growth. This
will be further aided by recoveries in the U.S. and global economies
which will likely strengthen demand for agricultural products and
improve island tourism," added Wright.
RBC expects growth in P.E.I. to carry forward into 2012 with the
province replicating the 2.2 per cent growth rate forecast for 2011.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales
and housing starts.
The full report and provincial details are available online as of 8 a.m.
ET today www.rbc.com/economics/market/pdf/provfcst.pdf.
For further information: For further information:
Craig Wright, RBC Economics Research, (416) 974-7457
Elyse Lalonde, RBC Media Relations, (416) 974-8810