Western provinces will continue to lead the country in economic growth by a wide margin in 2008, while the strong Canadian dollar and weak U.S. growth hamper the outlook for Ontario and Quebec, according to the latest provincial outlook on the Conference Board of Canada.

“Although Central Canada’s economic performance is forecast to improve next year, a full turnaround is not expected until 2009,” stated Marie-Christine Bernard, associate director, provincial outlook. “Again in 2008, western provinces will benefit from strong commodity prices that will spur development of their resource industries.”

Real gross domestic product (GDP) in Newfoundland and Labrador is expected to expand by 6.8% this year, topping all provinces. This performance is fuelled primarily by a huge one-year surge in mining output. However, offshore oil production will peak in 2007. As result, the economy is forecast to expand by just 1.5% in 2008.

Saskatchewan’s sizzling economy will expand by 4.3% in 2007, due to soaring potash production and rising migration into the province. As the mining, consumption and housing boom eases in 2008, the provincial economy will grow by a more sustainable 2.8%.

A severe slowdown in energy exploration will hold real GDP growth in Alberta to 3.4% this year. The province’s economic growth will accelerate slightly to 3.6% in 2008, thanks largely to increased non-conventional oil production.

Manitoba’s economy is forecast to grow at a solid average pace of 3.6% in 2007 and 2008. Construction, both residential and non-residential, is expected to drive growth. The manufacturing outlook is positive because shipments have increased despite the high dollar.

Not even the troubled forestry sector-a casualty of the U.S. sub-prime housing market meltdown-and weakness in manufacturing can stop British Columbia from posting strong growth of 2.9% and three% in 2007 and 2008, respectively. Winter Olympic preparations and public infrastructure work are maintaining strength in the construction sector.

Although Quebec’s domestic economy is thriving, overall growth is held back by the struggling export-oriented manufacturing sector. As a result, growth of 2% is forecast for this year, with a further gain of 2.6% expected in 2008.

Ontario’s economy will trail the national average for the next two years, averaging growth of 2.5%. The auto industry will remain sluggish as vehicle sales south of the border are expected to falter to a nine-year low. The fallout from the sub-prime mortgage crisis has dampened U.S. consumer spending, limiting growth in exports. Still, investment in machinery and equipment will accelerate in 2008, and the Conference Board forecasts stronger residential construction in Ontario next year.

Large capital projects in the resource sector will stimulate growth in New Brunswick and Nova Scotia, with both provinces expected to grow by slightly more than two% in each of the next two years. Prince Edward Island’s economy will grow by 2.4% this year, as a result of personal income tax cuts and healthy wage gains that have boosted consumer spending. Slower employment growth next year will weaken overall growth.