The emerging economic environment is likely to leave Alberta with the fastest economic growth among the provinces in 2001, with Ontario moving to the bottom of the pack, say TD Bank economists.

Provincial job markets are likely to be in for rough sailing in the remaining months of 2001, and through the first half of 2002, TD says. “What began as a manufacturing-led slowdown in growth and job creation in central Canada is likely to become increasingly widespread across the country in the months down the road,” says Derek Burleton, senior economist at TD Bank. “By mid-2002, jobless rates in most provinces will hover 0.5-1.5 percentage point above their levels of late 2000, with notable increases forecast for Ontario and Quebec.”

The near-term economic picture in the United States has worsened considerably, hitting all provincial manufacturing sectors. Activity in provincial resource sectors has been hit by softening commodity markets. Consumer and business confidence in all provinces will be dealt a blow by falling corporate profits, rising unemployment rates, tumbling equity prices and most recently, the uncertainty resulting from the terrorist attacks south of the border.

By early next year, growth prospects for Canada’s regional economies will likely begin to brighten, as the U.S. economy starts to respond to the unprecedented speed of monetary easing, as well as the dose of personal tax relief, put in place this year. “Although economic growth should pick up across the provinces in the first quarter of 2002, improvements in rates of provincial job creation are likely to lag behind until mid-year,” says Burleton. “Happily, 2003 should mark a return to an environment of rapid job gains and low unemployment similar to that enjoyed at the end of the 1990s and in 2000.”

Relative strength in the oilpatch is expected to keep Alberta at the head of the pack, while manufacturing weakness guts Ontario and Quebec. The Atlantic provinces may also outperform, thanks to some ongoing energy projects. TD sees just 1.4% average national growth this year, rising to just 1.7% in 2002, before taking off in 2003.