BMO Economics: Canada's Regional Divide Narrowing

BMO Economics: Canada's Regional Divide Narrowing 
- Projected national growth of 1.7 per cent in 2013  
- Newfoundland & Labrador to lead the country with 4.5 per cent
growth this year  
- Resource sector continues to fuel growth in Western Canada  
- U.S. recovery to create momentum in Central Canada 
TORONTO, ONTARIO -- (Marketwire) -- 01/17/13 -- Canadian economic
performance continues to vary widely by region, but the gaping divide
between growth rates in Western Canada and the rest of Canada appears
to be on a narrowing trajectory, according to the Provincial Monitor
report released today by BMO Economics. 
"The resource sector continues to fuel solid growth in Western
Canada, but Alberta's economy is expected to downshift further this
year to a sub-3 per cent pace from 3.4 per cent in 2012 and torrid
5.1 per cent growth in 2011," said Robert Kavcic, Senior Economist,
BMO Capital Markets. "While the energy sector is still humming,
growth has been tempered at the margin by a lack of pipeline
capacity, including still uncertain development prospects and a deep
discount for Canadian heavy oil prices. British Columbia, with its
weakening housing market, as well as Saskatchewan and Manitoba are
also expected to downshift this year, narrowing the gap between the
West and the rest." 
Central Canada continues to face a handful of challenges, including
fiscal restraint, a stronger-than-parity loonie and sluggish U.S.
demand in the first half of 2013. "Ontario's economy will likely
decelerate to a sub-2 per cent pace this year," noted Mr. Kavcic.
"However, as the bulk of U.S. fiscal restraint runs its course and
recovering U.S. home prices spin a positive feedback loop into
construction and consumer spending, Ontario's economy should gather
momentum into 2014. Meanwhile, Quebec's expected provincial-low
growth rate should turn up, albeit to a still-sluggish 1.3 per cent
The strong loonie and public-sector capital spending retrenchment
continue to depress growth in Atlantic Canada, with a few exceptions.
"Preparatory work for Nova Scotia's $25 billion Federal shipbuilding
contract continues, and growth in the province will be well supported
over the medium term," stated Mr. Kavcic. "Meantime, despite offshore
maintenance stalling real GDP in Newfoundland & Labrador last year,
underlying trends remain healthy, and real GDP growth should pace the
country this year; Exxon Mobil's announced go-ahead of the Hebron
project is a bright spot."  
"Several regions of Canada continue to perform well, but businesses
across the country need to remain adaptable to change," said Steve
Murphy, Senior Vice President, Commercial Banking, BMO Bank of
Montreal. "With the strength of the loonie, the availability of
business credit, and the favourable interest rate environment, now is
an excellent time for businesses to make investments that will
enhance their productivity over the long term."  
Real GDP Growth Rate (per cent): 

                                    2011    2012    2013
Canada                               2.6     2.0     1.7
BC                                   2.8     2.5     2.2
Alberta                              5.1     3.4     2.7
Saskatchewan                         4.9     3.1     2.6
Manitoba                             2.0     2.6     2.2
Ontario                              1.8     2.0     1.7
Quebec                               1.9     0.9     1.3
New Brunswick                        0.0     1.0     1.6
Nova Scotia                          0.5     1.5     1.8
PEI                                  1.6     1.6     1.5
Newfoundland & Labrador              3.0     0.5     4.5

The full Provincial Monitor can be downloaded at 
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $525 billion as at October 31, 2012, and more
than 46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
Media contacts:
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(416) 867-3996 
Valerie Doucet, Montreal
(514) 877-8224 
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