Manitoba should lead the Canadian economy this year with 4.1% growth in gross domestic product, up from 1.4% last year, Royal Bank’s RBC Financial Group says in its latest provincial outlook.

Growth of 3.1% is predicted for 2005. The RBC outlook rates the provinces according to employment growth, unemployment rates, retail sales, housing starts, international exports, manufacturing output and the consumer price index.

While there are significant regional variations, last year’s growth leaders — Saskatchewan and Newfoundland and Labrador — are expected to experience the biggest slowdown.

“Manitoba is expected to experience the best overall growth of any province in Canada this year,” Derek Holt, assistant chief economist at RBC, said Thursday in a news release.

“The three main factors working in the province’s favour are improved crop conditions, net migration and fewer constraints on demand for hydroelectricity.”

Ontario’s new fiscal-resolve budget will reduce potential economic growth by half a percentage point for 2004. RBC is forecasting economic growth for Ontario of 2.5% year and 3.4% in 2005.

Newfoundland and Labrador’s economy is expected to grow by 2.5% in 2004 and 2.2% in 2005.

Saskatchewan is facing several economic challenges that are expected to slow growth to 2.5% for this year and 2.8% for 2005.

Weaker manufacturing activity and exports will moderate economic growth in Quebec to 2.5% in 2004 and 2.9% in 2005.

Alberta’s economy remaining healthy despite downward pressures on the agriculture and cattle industries. Real GDP is expected to grow by 3.3% this year and 3.2% in 2005.

British Columbia’s economy is improving with solid growth of three% this year and 3.5% in 2005.

Nova Scotia is expected to show 2.3% growth this year and 2.6% in 2005 after having the weakest provincial performance in 2003.

New Brunswick GDP is expected to grow by 2.4% in 2004 and 2.7% in 2005 after outgrowing most of the rest of the country last year after business investments jumped 17%.

Prince Edward Island’s economy is expected to grow at a moderate pace, at 2.4% for this year and next.