After gaining momentum earlier this year, the Canadian economy is poised to expand further, with Alberta posting the greatest growth.

That’s according to the Provincial Monitor report released by BMO Economics.

Canada’s real GDP is expected to hit 2.3% this year—up from 2.0% in 2013 and 2.4% in 2015.

“Much of the recent strength has been driven by an increased contribution from net exports, as the combination of a weaker Canadian dollar and stronger U.S. economy are clearly helping,” says Robert Kavcic, senior economist with BMO Capital Markets.

Also, the growth disparity between Alberta—which has the greatest growth—and the rest of the provinces is expected to shrink due to Canada’s export momentum and the recent decline in oil prices, according to Kavcic.

“Even with some projects delayed due to rising costs, real GDP [in Alberta] is expected to grow 3.5% this year and 2.9% in 2015, the only province near the 3% mark,” he says. “While the price correction could impact some smaller marginal producers, it would probably take sustained sub-$80 oil to really slow activity in the province.”

British Columbia will likely perform roughly in line with the national average through next year, the report predicts.

However, in Saskatchewan and Manitoba, volatile crop production will likely affect growth.

In Central Canada, weaker oil prices are good news, especially if weakness is attached to a weaker loonie. Ontario is expected to grow 2% this year and 2.4% in 2015, up from just over 1% in each of the prior two years, says Kavcic.

Quebec’s economy is also likely to benefit from stronger U.S. demand. Also, the province’s newly elected majority government brings political stability that has been absent for a while, Kavcic adds.

The report predicts slower growth in Atlantic Canada, due to issues such as demographic problems and fiscal austerity. However, in most of the region, that growth is expected to be greater compared to the sluggish pace of recent years.

“Nova Scotia is poised to lead the pack at 1.6% this year, picking up to 2.1% in 2015, as work begins on the federal shipbuilding contract,” says Kavcic.

New Brunswick and P.E.I. continue to struggle with sluggish population growth, but a weaker Canadian dollar should provide some boost to exports, according to the report.

“The provinces, as a whole, are showing great strength,” says Steve Murphy, head of Canadian commercial banking with BMO Bank of Montreal. “Now is a good time for Canadian business owners to invest in their organization—whether it’s in human capital or other business areas—in order to position themselves for both short- and long-term growth.”

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Yeah, sure. More like fall by 12%.

Wednesday, December 24 at 12:53 am | Reply

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