After avoiding a fall into recession last year, Manitoba is poised to be near the head of the class in Canada in 2011.
Just how strong Manitoba\u2019s economy will be depends on whom you talk to, with experts estimating real gross domestic product growth ranging from 2.5% to 3.5%. The outlook is similarly bullish for 2012, with forecasts calling for growth in the 2.5%-3.2% range.
Any of those numbers would represent a significant improvement over 2010, when the province posted real GDP growth of 1.8%. That figure would have been considerably higher if the agriculture sector hadn\u2019t been hit with one of the wettest summers on record, effectively drowning the growing season in many areas.
Assuming precipitation levels return to anything close to normal this year, says Paul Ferley, Royal Bank of Canada<\/b>\u2019s assistant chief economist in Toronto, the agricultural sector should provide a significant boost to Manitoba\u2019s economic performance.
The province\u2019s manufacturing sector is expected to pull more than its weight, too, he adds, with a forecast of 6% growth this year. RBC economists are the most bullish about Manitoba\u2019s prospects, predicting a 3.5% increase in real GDP for 2011.
Says Ferley: \u201cWe\u2019ve assumed with the recovery in the U.S. and globally that we\u2019d start seeing strengthening manufacturing activity. We did, to some extent, see it in 2010. It was a lessening of the declines that were more pronounced in 2009.\u201d
An economic recovery south of the border is key for Manitoba because such a large portion of the province\u2019s output is destined for the U.S. Ferley says he\u2019s confident that aggressive action by U.S. policy-makers and increased liquidity provided by the U.S. Federal Reserve Board will keep the expansion on track. It is not, however, a risk-free prognosis.
\u201cIt was a severe recession that caused lots of damage to household balance sheets [in the U.S.],\u201d says Ferley. \u201cThe financial system, although improved, isn\u2019t back to where it was. The global economy is still [susceptible] to negative shocks, such as major military conflicts, which could sink confidence and push the U.S. and global economy back into recession.\u201d
Robert Kavcic, an economist with Bank of Montreal<\/b> in Toronto, says Manitoba should be able to rely on broad-based strength in 2011 as commodities, housing and consumer spending are expected to post positive growth.
Above-average population growth is poised to play a positive role as well, he adds. Net migration for the 12 months ended Sept. 30, 2010, was 13,200, representing the fastest rate of population growth in Manitoba since the early 1980s. Many of the new arrivals came via the provincial nominee program, an initiative that seeks to fill job shortages with skilled workers from around the globe.
\u201cPopulation growth drives consumer spending,\u201d Kavcic says. \u201cThe spinoff is you need to build more houses, so it creates jobs in the construction sector. It looks like it\u2019s going to continue, too.\u201d
John McCallum, finance professor at the I.H. Asper School of Business at the University of Manitoba in Winnipeg, is relatively upbeat about Manitoba\u2019s prospects in 2011 and 2012. The main drivers for both Manitoba and Canada, he says, will be moderate economic growth in the U.S., a relatively strong housing sector and strong demand for commodities.
The high-flying loonie, however, will be a drag on the export market. \u201cI don\u2019t see the loonie coming down [from parity with the U.S. dollar],\u201d McCallum adds. \u201cThat\u2019s great if you want to go to Disney World, but not so great if you have an export industry.\u201d
McCallum thinks Manitoba will churn out 2.5% or 2.6% real GDP growth in 2011 and slightly higher next year.
The employment picture also showed improvement last year. According to Statistics Canada, Manitoba had the second-best labour force growth in the country at 2.1%, the second-best growth in full-time jobs and the third-best employment growth. Manitoba\u2019s unemployment rate is only 5.2%.
But, McCallum says, Manitoba has a couple of unique trends that could pose significant risks. First, almost one-third of provincial government revenue comes from federal transfer payments. As Ottawa starts to cut into its $56-billion deficit, Manitoba is likely to feel the pinch. Second, employment stability is mainly due to the public sector. Says McCallum: \u201cJobs have been heavily driven by public-sector spending, and it\u2019s not clear how long that can be sustained.\u201d \tIE<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Brighter signs in the U.S., a rising population and better crops could boost Manitoba\u2019s economy in 2011 and beyond<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3130],"tags":[3119,3197],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316794"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=316794"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316794\/revisions"}],"predecessor-version":[{"id":362055,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/316794\/revisions\/362055"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=316794"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=316794"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=316794"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=316794"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}