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Newfoundland and Labrador economy Canada’s ‘runaway leader’: forecast

St. John’s skyline is seen in this file photo. The Conference Board of Canada said Wednesday that Newfoundland and Labrador will lead all other provinces in economic growth this year and next.

Paul Daly/The Globe and Mail

Forget the West.

Newfoundland and Labrador is the new boom province in Canada, according to the Conference Board of Canada's latest provincial forecast.

Surging oil production and resource development will propel growth of 6 per cent this year and 3.4 per cent in 2014 to lead all other provinces.

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The Conference Board said Newfoundland is now the "runaway leader" in a "very uneven" forecast.

Alberta, Saskatchewan and Manitoba are also expected to grow faster than the national average of 1.8 per cent this year "While the economic prospects for Western Canada remain positive, an uncertain outlook for commodity prices and elevated development costs in the resource sector have led to some expansion projects being postponed," according to the 15-page report.

The remaining six provinces will trail the national average – Ontario (1.4 per cent), Quebec (1.4 per cent), B.C. (1.6 per cent), Nova Scotia (1.5 per cent), New Brunswick (1 per cent) and Prince Edward Island (1.5 per cent).

The Conference Board says growth will pick-up in 2014 – to 2.5 per cent – thanks to the continuing U.S. recovery and Europe's progress working through its sovereign debt woes.

Fiscal restraint will continue to keep a lid on growth until "at least 2016," according to the forecast.

"The global economic recovery is, once again, mired in uncertainty," the report said. "For every uptick in one indicator, there is a downtick in another, and the near-term is fraught with risks."

Newfoundland has become a boom-bust economy. Gross domestic product fell 4.8 per cent last year, but it will run at "full speed" in both 2013 and 2014.

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The Conference Board cites a 12.5-per-cent jump in oil production this year and record private sector investment over the next two years, including an expansion project by Iron Co. of Canada, Alderon Iron Ore's Kami project, a Vale processing facility, the Hebron gravity-based oil structure and the Muskrat Falls hydroelectric development.

In spite of the economic boom, the province's real estate market is slowing down.

Alberta is also continuing to do relatively well, in spite of questions surrounding future oil sands investment.

The big story in much of the rest of the country is muted business investment and fiscal restraint.

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