A customer fills up at a gas station in Toronto in this file photo.Fred Lum/The Globe and Mail
RBC Economics has downgraded its latest forecast for the Canadian economy in 2015 after a sharp drop in energy prices.
The bank projects Canada's real GDP to grow by 2.4 per cent this year – a reduction of 0.3 percentage points from its forecast issued last December.
RBC says while the drop in energy prices is a negative for the oil and gas sector, much of the weakening will be offset by stronger consumer spending and exports.
The bank predicts exports will provide a lifeline to the economy this year after a strong performance in 2014 when volume increased by 5.4 per cent.
RBC also predicts lower gas prices will fuel more consumer spending.
Provincially, RBC says Alberta's forecast is significantly lower, as is the outlook for Newfoundland and Labrador and Saskatchewan to a lesser extent. It says brighter prospects were expected in Ontario, B.C., Quebec and most other provinces.
Alberta's economy is expected to grow at an anaemic pace in 2015, as persistent energy sector weakness and an unfolding spill over into consumer confidence prompted RBC to revise its 2015 real GDP forecast significantly lower - to 0.6 per cent from 2.8 per cent forecasted in December. According to the latest Provincial Outlook released today, RBC expects growth will pick up slightly to 1.1 per cent in 2016.
"Alberta saw a dramatic turn of events in recent months, as it became clear that the steep drop in crude oil prices since mid 2014 would have profound adverse repercussions for the province's energy sector," said Craig Wright, senior vice-president and chief economist, RBC. "The initial position of strength in the economy is likely sufficient to keep the province in growth territory in 2015 though the risks of a recession can't be dismissed."