The Canadian Press

The Atlantic Provinces Economic Council says the region seems to have weathered the deepest recession since the Second World War better than other parts of Canada.

In it’s annual economic outlook, released Monday, the think tank said the world economy is showing signs of recovery.

It said that fiscal stimulus, a recovery in consumer and business confidence and a gradual pick up in global demand should help Atlantic Canada return to growth in 2010.

APEC does issue a cautionary note saying the higher Canadian dollar will temper the impact of improving U.S. demand on Atlantic exports.

It predicts growth of up to 1.5% in P.E.I. next year as a result of higher government spending.

In New Brunswick, where declining export demand and a decision not to proceed with a second oil refinery hit hard, the report said there are signs of improvement.

It predicted growth of 1.4% in 2010, based on higher consumption and investment spending combined with improved export demand.

APEC said Newfoundland and Labrador will lead the region in growth next year with a gain of 3%, reflecting a rebound in mining and higher investment spending in offshore oil industries.

Nova Scotia’s recovery will be a modest 1.7% helped by higher output of natural gas and growth in investment spending.

APEC cautioned that longer-term challenges for the Atlantic region include the risk of slower U.S. growth and the need to address swollen provincial deficits.