The Canadian economy will run at two very different speeds this year, as a new bank report foresees stronger growth in the Prairies but harder times in Ontario and Quebec.
Wednesday’s provincial economic update by TD Economics concludes that growth will be stronger than previously expected in Alberta, Saskatchewan and Nova Scotia, but slower in Ontario, Quebec and British Columbia.
This is primarily because of the strength of commodities in the Prairies, while Nova Scotians are expected to benefit from Ottawa’s decision to award a $25-billion shipbuilding contract to Halifax’s Irving Shipbuilding.
The reason for struggles elsewhere include the likelihood of “a significant correction” in the B.C. housing market, and provincial government restraint in Ontario and Quebec.
“Ontario is by far the province with the most challenging deficit situation,” states the report, authored by TD Senior Economist Jacques Marcil.
Nationwide, all provinces will have a lot riding on the outcome of continued uncertainty in the European economy. Major trouble there will ultimately lead to slower growth in Canada.
“Our main working assumption is that Greece will default within the first half of 2012, and that extraordinary action from European leaders and the European Central Bank will be required to stop the crisis from spreading,” the report states.
TD expects the value of the Canadian dollar will decline in 2012, helping provincial exports. Canada’s unemployment rate, according to the bank, will be 7.6 per cent in 2012 and 7.4 per cent in 2013. Provincially, unemployment is expected to be highest in Newfoundland and Labrador at 12.3 per cent for 2012 and lowest in Alberta, where the bank projects an unemployment rate of five per cent.