Manitoba’s economy is forecast to expand by 3.7% for the second consecutive year, making it the fastest-growing provincial economy in Canada in 2008, according to a report from the Conference Board of Canada.

“Boosted by ongoing construction projects, robust domestic spending and an optimistic outlook for manufacturing, the Manitoba economy is firing on all cylinders. Its neighbour, Saskatchewan, is also poised for another year of strong growth,” says Marie-Christine Bernard, associate director, Provincial Outlook. “In central Canada, the sombre U.S. outlook will present a challenge for both Ontario and Quebec, but neither province is expected to slide into a recession.”

In spite of the slowing U.S. economy and the high Canadian dollar, the well-diversified manufacturing sector in Manitoba is being fuelled by large, lucrative orders for buses and aircraft parts, the Conference Board says. As a result, manufacturing in Manitoba is expected to grow by an average of 5.5% over the next two years, two percentage points higher than the national average.

Saskatchewan’s economy is also booming, with growth of 3.6% expected in 2008-slightly below the province’s 2007 pace. High commodity prices are driving mining activity and boosting construction projects. In addition, new migrants are bolstering Saskatchewan’s domestic economy.

The Conference Board says Alberta’s economy is cooling down, due to a five-year low in drilling activity, combined with weaker gains in retail sales and lower population growth. But the service sector is still anticipated to grow strongly, boosting overall economic growth to 3.3% in 2008.

Weakness in the U.S. is cause for concern for British Columbia’s forestry and manufacturing sectors, but the province’s domestic economy remains strong enough to produce real GDP growth of 3.1% this year.

The weakening trade balance will continue to erode bottom-line growth in Ontario and Quebec, and more manufacturing layoffs are expected. Still, healthy capital spending and decent income growth will support Ontario’s economy, producing growth of 2.1% in 2008. The domestic economy in Quebec is even more of a pillar of growth, thanks to federal and provincial tax cuts that will boost consumption. As a result, Quebec’s real GDP is forecast to grow by 2.4%. Both provinces can expect better performances in 2009.

In Nova Scotia, new private investment in capital projects and stronger manufacturing prospects should add to a vigourous service sector, producing growth of 2.6% this year. New Brunswick will benefit from strong mining and construction activity – offsetting difficulties in the forestry sector – to produce growth of 2.2% in 2008. Following a hiring boom in 2007, Prince Edward Island’s economy will increase by a modest 1.9% this year, although tax reductions over the past 10 months will support income growth.

After growing by 7.3% last year, Newfoundland and Labrador will post growth of just 1.5% in 2008, due to a decline in oil production, the Conference Board says.