The difficulties of the Canadian and Quebec economies are gradually dissipating to give way to a clearly vigorous expansion in 2004 and 2005, according to the latest economic outlook of Desjardins Group.

Business activity will grow finally catching up with households, which have allowed the economy to remain afloat.

After having being halved to 2%, in 2003, real GDP growth in Quebec will rise to 2.8% in 2004, and then to 3.6% in 2005.

“The Quebec economy went through a ‘bad patch’ in the first half of the year, but conditions propitious to growth are now in place to end the year 2003 on a positive note and start off 2004 with optimism”, Desjardins VP and chief economist, Gilles Soucy, said in a news release.

The factors that darkened Quebec’s economic horizon in the first half of 2003 have disappeared for the most part.

However, Soucy estimated that Quebec firms will have to deal with a Canadian dollar that will remain within a spread of US75¢ to 78¢ next year, prompting them to exercise tight control over their input costs and invest further to boost productivity.

Quebec, just like Canada, will be able to count on a US economy that has reassumed its role as locomotive of the global economy and that has retaken a comfortable lead of the G-7 countries in terms of growth, Soucy said.

Over the next two years, Quebec will also be able to rely on the Canadian economy, which is slated to grow by 3% in 2004 and 3.8% in 2005, compared to a sluggish 2% this year.

“Accordingly, foreign trade, which has been the Achilles’ heel of the Quebec economy this year, will be recovering over the next two years. In spite of the Canadian dollar’s rally since the outset of 2003, Quebec exports will rise during that period, both toward the United States and the other Canadian provinces”, commented Soucy.