Canada climbed its way out of recession in the third quarter of 2009, according to Scotia Economics’ latest Provincial Trends report.

“That Canada escaped from the global slump fairly quickly is reflective of our relatively healthy household balance sheets and stable financial system,” says Alex Koustas, economist, Scotia Economics.

“However, the modest pace of the recovery highlights the ongoing trade and competitive hurdles that need to be overcome in order to return to stronger growth.

“Meanwhile, the regional disparity in growth across Canada will continue in 2010 with the Canadian dollar expected to remain strong, while commodity producers benefit from a rebound in global markets,” adds Koustas.

In Atlantic Canada, New Brunswick is expected to underperform the national average slightly in 2010 with a rebound of 2.1% as market conditions in forest products remain fairly challenging and some construction activity winds down.

Nova Scotia’s economy is expected to rebound with growth of 2.2% in 2010, supported by continued strength in services and some resource gains.

Prince Edward Island is expected to rebound with GDP growth of 1.9% in 2010, though its recovery will be less pronounced than the Canadian average.

Newfoundland and Labrador’s growth fell sharply in 2009, as commodity prices, oil in particular, plummeted in late 2008 and remained at a low ebb in early 2009. The province is set to get back on track and outperform the national average with GDP growth of 2.9% in 2010.

For Central Canada, a rebound in manufacturing and a turnaround in construction will boost activity in Ontario, while Quebec’s economy, though solid, will lag behind.

Ontario is expected to experience a 2.7% rebound in growth in 2010. The auto sector and stimulus programs will lead the recovery, with solid service sector growth providing an added boost.

Quebec is expected to post moderate growth of 2.2% in 2010.

Resource recovery will be the main story for Western Canada in 2010, Scotia Economics says.

British Columbia is expected to rebound in 2010 with GDP growth of 3%. The turnaround will be propelled by stronger resource values, increased transportation activity and the Winter Olympics, Scotia Economics says.

Alberta is expected to get back on the growth track in 2010, posting a 2.9% increase in real GDP. Higher commodity prices, strengthening non-residential construction and buoyant infrastructure investments will underpin the rebound.

Saskatchewan is expected to experience GDP growth of 2.8% in 2010, supported by interprovincial migration, a recovery in resources and infrastructure spending. Scotia Economics foresees a turnaround for potash in 2010, with a double-digit increase in light crude production rounding off a stronger year for the resource sector.

Manitoba has shown resilience in 2009 and is expected to return to a steady growth path in 2010 with a rebound of 2.6%, underpinned by hydro utility development and solid manufacturing activity and investment.