Press release from CNW Group
LBS Economic Research's Provincial Monitor: The Gap Between Resource-Rich Provinces and the Others is Narrowing
Wednesday, July 10, 2013
LBS Economic Research's Provincial Monitor: The Gap Between Resource-Rich Provinces and the Others is Narrowing09:51 EDT Wednesday, July 10, 2013
MONTREAL, July 10, 2013 /CNW Telbec/ - In its most recent update on economic developments in Canadian provinces, the LBS Economic Research's Provincial Monitor confirms that the gap between resource-rich provinces and the others is narrowing. This situation is likely due to difficult weather conditions and the growing uncertainty with respect to pipeline capacity in Alberta and Saskatchewan. The outlook for these two provinces has been downgraded for 2013, while the one for Quebec and some of the Atlantic Provinces have been revised slightly upward.
From a national perspective, LBS Economic Research is still expecting real GDP to grow just 1.5% in 2013 and 2.2% in 2014. Different factors will affect the provinces' economic growth in the next two years. First of all, domestic demand will be curbed by a slowdown in residential investment. Some provinces — British Columbia, Ontario and Quebec — will be impacted more than others because of the persistent imbalances in their respective markets. Moreover, a shift in consumer behaviour, favouring savings over credit, will affect provinces where the personal consumption share of GDP is greater (60% or higher) — more specifically, in British Columbia, Ontario, Quebec and the Atlantic Provinces. In addition, major investment projects in the Atlantic Provinces will stimulate economic growth for several years to come. As for support to economic growth by the provincial governments, it should remain limited as most of them are tightening their belt to eliminate budget deficits.
From a more global perspective, Canadian provinces' external sector will continue to face challenges associated with the slowdown in China and the recovery in the United States. Economic activity south of the border is indeed gradually gaining momentum, with benefits for the major exporting provinces to be more visible in 2014. At the same time, the Canadian dollar will remain under par with its American counterpart, as it has been the case since the beginning of the year. This will help reinforce exporters' profit margins, which should, in turn, stimulate investment and job creation. LBS Economic Research also anticipates that the American real estate sector's recovery will gain traction and continue to fuel demand for lumber and wood-derived products in British Columbia, Quebec, New Brunswick.
Finally, the energy sector should continue to enjoy higher natural gas prices throughout 2013, which will favour production in British Columbia, Alberta and Nova Scotia. Moreover, despite the negative impacts of flooding in southern Alberta on pipeline capacity, crude oil and bitumen producers should reap the benefits of the recent increase of Canadian prices for these resources vis-à-vis global prices. However, uncertainties surrounding the future access of Canadian energy resources to American and Asian markets are limiting producer price growth and undermining the climate of confidence.
The full report, as well as an update of provincial economic forecasts, is available on LBS Economic Research web site: http://www.vmbl.ca/Economics/16/ProvincialMonitor_June2013.pdf. For any question, contact Marie-Claude Guillotte, economist at 514 350-2925.
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SOURCE: Laurentian Bank of Canada
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