Saskatchewan and Manitoba will lead the country in economic growth this year, according to a report released today by the Conference Board of Canada.

“While ‘the west is the best’ still holds true, attention this year has shifted away from Alberta to Saskatchewan and Manitoba, as high prices for nearly all of their natural resources will make them the two fastest-growing economies in Canada,” says Glen Hodgson, senior vp and chief economist. “Resource-rich Saskatchewan is poised to enjoy another year of stellar growth and Manitoba’s economy remains unfazed by hardship in the U.S. and Central Canada.”

Fuelled by sky-high commodity prices and a robust domestic economy, Saskatchewan will lead all other provinces in economic growth this year, with real gross domestic product (GDP) forecast to expand by 4.2%. While the economy will continue to perform well, real GDP growth is expected to moderate to 2.8% in 2009.

In Manitoba, a diversified manufacturing sector, large capital investment projects, a strong housing market and high commodity prices will fuel real GDP growth of 3.6% in 2008.

Alberta’s economy is settling down to a more sustainable rate of growth, the report says. Shortages of skilled labour and a decline in drilling activity will constrain growth to 2.6% this year. The province’s economic outlook is expected to improve in 2009.

British Columbia’s economy is expected to moderate to growth of 2.2% in 2008. The hobbled forestry and manufacturing sectors continue to be a drag on the economy.

The downturn in the auto industry will limit Canadian exports and constrain Ontario’s economic growth to only 0.8% this year, the report says. However, a modest recovery in U.S. consumer demand should allow Ontario’s GDP to rebound to the national average of 2.7% in 2009.

The weakening trade balance will also restrict growth in Quebec. Quebec’s real GDP growth is forecast to dip to 1.4% this year as the domestic economy moderates.

The outlook in the Atlantic region will be greatly influenced by investments in large capital projects. Nova Scotia will benefit from the development of the Deep Panuke natural gas offshore field, resulting in real GDP growth of 2% in 2008. Strong construction activity will allow real GDP in New Brunswick to increase by 2% in 2008. Prince Edward Island will experience stable economic growth, with real GDP expanding by 2.2% in 2008.

Following stellar growth of 9.3% last year, Newfoundland and Labrador will post growth of just 0.2% in 2008, due to a drop in oil production. However, the province is forecast to post real GDP growth of 4.2% in 2009, highest among the provinces.