Economies of Central and Eastern Canada leading the pack

(September 23 – 15:30 ET) – The economies of central and eastern Canada will lead the way in 1999, and continue to do well in 2000 and 2001, say TD economists in the latest issue of TD Quarterly Economic Forecast. They note that strong economic growth across the Atlantic provinces is being fueled by the development of major construction projects and rising production from the offshore oil and gas industries.

This year, Newfoundland will record the fastest job growth among the provinces, at close to five per cent. Looking ahead, prospects for economic growth in the province are equally bright over the next few years.

Overall economic activity in P.E.I. is being restrained this year by weak performances in the agriculture and fishing sectors, as dry weather conditions have hurt this year’s potato crop and the number of lobster landings is down from the high levels recorded a year ago. Economic prospects for Prince Edward Island remain good over the next few years, as continued growth in tourism revenues will encourage the development of new recreational facilities.

This year, economic growth in Nova Svotia is being spurred by the development of the Sable Island natural-gas project and related pipeline. Nova Scotia’s economy will expand by more than 3 per cent for the second consecutive year in 1999, in spite of weakness in its coal mining industry and the winding down of production at the Cohasset-Panuke oilfield.

Job creation in New Brunswick has been particularly strong this year, leading to a drop in the unemployment rate from 12 per cent a year ago to less than 10 per cent in recent months — its lowest level in two decades. Although construction activity will slow in 2000-01, the New Brunswick economy will benefit from a stronger showing by the pulp and zinc industries, and a further expansion in its important call-centre industry.

The economies of the western provinces are trailing behind the national pace this year, but will perform better in 2000, say TD economists in the latest issue of TD Quarterly Economic Forecast. By 2001, economic growth in B.C. is expected to accelerate to 2.9 per cent — the province’s best showing since 1994. Over the medium term, however, TD economists note that the B.C. government will face the challenge of lowering the high tax burden on individuals and businesses while attempting to eliminate its budget deficit.

Following a weak performance in the first half of this year, consumer spending and housing activity in Alberta is expected to strengthen over the next few years, fueled in part by continued strong migration into the province. Provided that prices of crude oil and natural gas hold firm, the Alberta government will achieve large budget surpluses as revenues surge over the 2000-01 period.

Although mining activity in Saskatchewan should pick up next year — led by a rebound in the heavy-oil industry — little respite appears to be in store for the province’s farmers, since agricultural prices are expected to remain quite low. On a more encouraging note, non-residential building activity will receive a boost over the next few years from the construction of the Alliance pipeline across the province. Economic growth in Saskatchewan is expected to accelerate to close to the national pace by 2001.

The pace of expansion in Manitoba’s diversified manufacturing sector has shifted into lower gear so far this year, constrained by weakness in the farm-equipment industry.

The economies of central and eastern Canada are racing ahead this year, while the economies of the western provinces trail behind, say TD economists. Although the pace of job creation in Ontario has slackened in recent months, this has done little to dampen the buoyant mood of consumers. Next year, as slowing demand from the United States — Ontario’s primary export market — takes a toll on Ontario’s export-oriented industries, overall growth in the province will slip to a still-healthy rate of 3.5 per cent in both 2000 and 2001.

Provided that job creation snaps out of its recent slump in the months ahead, and that any labour disruptions are relatively short-lived, the near-term outlook is quite bright for the Quebec economy.

-IE Staff

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