Canada’s economic growth is being driven by resource-rich Western provinces, according to a Bank of Montreal report released Tuesday.<\/p>\n
Alberta leads the pack, with the bank predicting 3.5% real GDP growth this year, falling back a bit to 2.9% in 2013.<\/p>\n
“The energy sector remains the key driver of economic activity in the province, with crude bitumen production up 16% year-over-year through the first half of the year, and the Energy Resources Conservation Board expecting oilsands output to more than double by 2021,” said economist Robert Kavcic.<\/p>\n
The energy sector’s strength has attracted workers from elsewhere in Canada to Alberta, which has the country’s lowest unemployment rate at 4.4%.<\/p>\n
But BMO Kavcic says the industry faces some risk.<\/p>\n
“Cost pressures could again pick up, though oilsands operations are generally viewed as economical at prices above US$80 (per barrel),” he said.<\/p>\n
“Also, wrangling over new pipeline capacity continues.”<\/p>\n
Production from the Bakken, a massive oil deposit that stretches through parts of Montana, North Dakota and Saskatchewan, is filling up existing pipelines and causing Canadian producers to get a lower price for the heavy crude they produce.<\/p>\n
“Estimates suggest that production in Western Canada could be negatively impacted by 2015\/16 if there is not enough new pipeline capacity put in place.”<\/p>\n
BMO says Canada’s overall real GDP growth is expected to be 2.2% in 2012, with the Western provinces all topping that rate.<\/p>\n
Saskatchewan, where oil and gas extraction and potash and uranium mining are big economic drivers, is expected to see growth of 3.1% this year.<\/p>\n
For British Columbia, it sees real GDP growth of 2.5% and for Manitoba, growth of 2.6%.<\/p>\n
Further east it’s a different story. BMO sees Ontario posting growth of two per cent and the economies of Quebec and the Atlantic provinces growing at less than two per cent in 2012.<\/p>\n
The report says fiscal restraint, the high loonie and sluggish U.S. demand are putting a damper on growth in Central Canada.<\/p>\n
Kavcic noted some cause for optimism in Ontario’s auto sector.<\/p>\n
“Auto producers continue to invest in North America and, despite a strong currency and higher labour costs compared to the southern U.S. and Mexico, Ontario is no exception,” he said.<\/p>\n
“Toyota, for example, is expanding production at its Woodstock assembly plant _ a project worth about $100 million and 400 jobs. Plus, the CAW and Big Three automakers recently reached new four-year contract agreements. Output in the auto sector was up a solid 20% year-over-year through August.”<\/p>\n
Also Tuesday, the International Monetary Fund trimmed its global growth forecasts in its quarterly economic outlook.<\/p>\n
The IMF predicts the global economy will expand 3.3% this year, down from the estimate of 3.5% growth it issued in July. Its forecast for growth in 2013 is 3.6%, down from 3.9% three months ago and 4.1% in April.<\/p>\n","protected":false},"excerpt":{"rendered":"
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