The gap in economic growth between the resource-rich provinces and those more closely tied to a stagnant manufacturing sector will remain firmly in place next year, according to CIBC World Markets latest Provincial Forecast.

Capitalizing on robust Chinese demand for resources such as crude oil, copper, uranium, fertilizer and even wheat, the provincial economies of Alberta, British Columbia, Saskatchewan and Newfoundland are expected to continue to expand at a rate far greater than the national average. Meanwhile, central Canada, where growth is more entwined with U.S. consumer demand, will see its economy continue to limp along at least until 2008.

“It is clear that, at least from an economic perspective, not all parts of Canada are created equal,” said Warren Lovely, a senior economist with CIBC World Markets and author of the report. “Inherent differences in geography, resource endowments and industrial make-up mean divergences in provincial growth are to be expected. But the sheer magnitude of today’s gap in a host of economic indicators — real GDP being paramount among them — is truly immense.”

Once again, Alberta will lead the nation in real GDP growth next year. Following on this year’s 7.5% surge, Alberta is likely to record a hearty 5.5% real GDP gain in 2007. Ontario will pull up the rear this year and next with growth rates of 1.4% in 2006 and 1.8% in 2007.

“Whether you ship to China or not, producing the resources heavily demanded by the fastest growing part of the world is not a bad business to be in, and positive spillovers abound,” adds Mr. Lovely.

Conversely, the report finds that the provincial economies most dependant on the United States will continue to be challenged by ongoing currency adjustments and a housing-led slowdown in consumer demand. Even with an expected pick-up in the American economy in 2008, the report suggests growth in central Canada will likely be less than the pace expected in western Canada.