TORONTO, Dec. 12, 2013 /CNW/ - Following a challenging year for economic
growth, Quebec's economy is positioned to modestly accelerate in 2014,
according to the latest RBC Economics Provincial Outlook issued today. RBC projects Quebec real GDP to expand by 1.1 per cent in
2013, 1.7 per cent in 2014, and 1.6 per cent in 2015.
"Quebec's economic growth in 2013 has been challenged by a number of
factors, including deteriorating demographic trends - mainly a rapidly
slowing working-age population," said Craig Wright, senior
vice-president and chief economist, RBC. "While we do expect economic
growth to pick up in 2014, the new normal for the province may well be
slower than what was achieved in the past."
In its most recent economic and financial update, the Quebec Ministry of
Finance offered what RBC calls "a sobering assessment" of provincial
economic performance in 2013, citing slower household spending and
softening demand for new housing as key reasons for underperformance
relative to expectations.
In fact, the RBC Outlook notes that provincial retail sales in the first
nine months of 2013 grew minimally, and that housing starts were down
almost 22 per cent year-to-date in October. The lack of traction in
Quebec's economy appears to be mostly a domestic phenomenon, RBC says,
as provincial exports continue to expand at a decent clip - 4.5 per
cent year-over-year during the first three quarters of 2013.
"We expect that Quebec's key export markets will grow in 2014,
underpinned by improving demand from south of the border and a weaker
loonie relative to the USD," said Wright. "However, economic
developments on the domestic side will add even greater strength."
After slumping to 12-year lows in 2013, RBC indicates that housing
starts have very limited downside left and that construction will
provide a smaller drag on the economy next year. Job creation will set
the stage for stronger household spending in 2014, says RBC, following
substantial losses during the first half of the 2013.
RBC also observes that the economic stimulus plan announced by the
provincial government in October - which includes a variety of measures
totalling $2 billion over four years - will begin to contribute to
growth in 2014. And while this plan contains growth-enhancing measures
through 2016-2017, RBC says that the recently stated deficit
projections of $2.5 billion and $1.8 billion in 2013-2014 and
2014-2015, respectively, were accompanied by a vow to further tighten
spending in the medium-term.
"Beyond 2014, it is unclear how much of a stimulative impact provincial
fiscal policy will have in bolstering Quebec's economic growth. The
provincial government indicated that cost containment measures will
play a central role in reducing the deficit," added Wright.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 8 a.m. ET today at rbc.com/economics/economic-reports/provincial-economic-forecasts.html.
For further information:
Craig Wright, RBC Economics Research, 416 974-7457
Robert Hogue, RBC Economics Research, 416 974-6192
Elyse Lalonde, Communications, RBC Capital Markets, 416 842-5635