The provincial economies are taking flight in 2002, say TD Bank economists, with economic expansions of at least 2.2% likely across Canada this year.

Provincial economies are shaking off last year’s downturn with surprising vengeance in 2002, with even the lower-ranked provinces on the GDP growth scale likely to turn in respectable showings, say TD economists.

“There are two ingredients that have been adding particular spice to this year’s economic recoveries — booming housing markets and an abrupt ‘v-turn’ in manufacturing activity,” Derek Burleton, senior economist at TD Bank said in a news release.

The interest rate cuts put in place by the Bank of Canada last year continue to work their magic well into 2002, igniting a consumer buying frenzy. Burleton noted that recent and likely future rate hikes by the central bank should act to cool the pace of home sales and starts beginning in the second half of 2002.

There has also been a renaissance in manufacturing sectors from coast to coast, supported by improving demand conditions in the U.S. Burleton admitted that there remain some pockets of weakness, namely forestry and information-technology equipment, which are tempering the speed of recovery in some regions. But, he added, “On balance, the unprecedented headway that Canadian producers made in reducing inventories to comfortable levels in 2001 means that new demand this year has promptly translated into increased production.” TD Economics forecasts that the U.S. economy will continue to recover through 2003, laying the groundwork for continued healthy production gains in provincial manufacturing sectors.

Notwithstanding the common threads evident across the provincial landscape this year, significant variations remain in TD Economics’ provincial growth projections for 2002. “The range of growth projects are attributable in large part to differing fortunes of resource sectors across the country,” said Burleton.

He pointed out that strength in Newfoundland’s offshore oil industry will guide that province into first place in terms of growth in 2002. The province is likely to remain in first place again next year, powered in part by rising development activity at White Rose and Voisey’s Bay.

In contrast, weak activity in the western oilpatch until later this year will play a role in holding back recoveries in the west.

B.C.’s economy is expected to remain low on the provincial totem pole in both 2002 and 2003, as U.S. duties recently imposed on softwood lumber cripple its forestry sector, and government spending cuts weigh on employment..

While 2003 growth prospects for Alberta’s economy remain among the brightest in Canada, last year’s slump in oil and gas prices is expected to delay a full-blown economic expansion in the province until the latter part of 2002.

After struggling in 2001, Saskatchewan’s economy is expected to grow in 2002 and 2003, supported by a gradual recovery in the agriculture sector.

Manitoba’s economy, which held up better than most in 2001 thanks to an outperforming manufacturing sector, is likely to record a more muted bounce-back other provinces in 2002.

With the rebound in automotive industry, Ontario’s economy should show brisk real GDP growth in both 2002 and 2003 and a return to low unemployment.

The Quebec economy is projected to record the third fastest economic growth rate among provincial economies in 2002, surpassing Ontario.

The New Brunswick economy appears to be shaking off two years of economic weakness, supported by a long-awaited improvement in the construction sector.

Although a dramatic slowdown in production in Nova Scotia’s natural-gas industry will likely impede real GDP growth in 2002, new development projects gearing up in 2003 will put the province’s economy back in the fast lane.

Coming off a disastrous year for potato farmers in 2001, a likely return to more normal crop levels in 2002, combined with a pickup in manufacturing activity, is expected to support brisk expansion in P.E.I.’s economy this year.