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Western Canada leads the nation in growth

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by Richard Gilbert

Western Canada will continue to lead the country in demographic and economic growth, which is being driven by inter-provincial migration and strong commodity prices.

Western Canada will continue to lead the country in demographic and economic growth, which is being driven by inter-provincial migration and strong commodity prices.

“The recent economic slowdown is now barely noticeable in Western Canada,” said Marie-Christine Bernard, associate director with the Conference Board of Canada.

“Despite concerns over global growth and the lasting fiscal problems in Europe, growth in the Western Canadian provinces is expected to be a full percentage point stronger than in the rest of the country this year and next.”

A recent report by the Conference Board of Canada predicts that Alberta, B.C., Saskatchewan and Manitoba will all expand faster than the Canadian economy as a whole.

The west is forecast to post real growth in gross domestic product (GDP) of 2.1 per cent in 2012.

Growth in Western Canada is leading the pack.

For example, tens of billions of dollars are expected to be invested in Alberta on the construction of new oilsands projects, due to geopolitical tensions that are keeping the West Texas Intermediate benchmark price for oil around US$100 per barrel.

The provincial construction industry will average annual growth of five per cent over the next two years, which will be the strongest performance of all Canadian provinces.

Growth will continue, despite the large reduction in public spending expected in 2012 as the Economic Action Plan ends.

Real GDP in Alberta will increase 3.3 per cent this year, followed by 4.0 per cent growth in 2013.

In B.C., the mining sector is expected to perform well over the next few years, with new mine developments and continued increases in shale gas production.

However, the uncertainty surrounding international financial markets and a sharp reduction in government investment spending is holding back growth, which will be limited to 2.1 per cent in 2012.

Activity in the construction industry will also be modest this year, as gains in private investment are partially offset by the reduction in public investment.

The economy is expected to perform much better in 2013, with real GDP growth accelerating to a 3.6 per cent pace, making B.C. one of the country’s fastest-growing economies.

The forestry industry will pick up steam as the recovery in the U.S. housing market becomes stronger.

Manufacturing will also expand as Seaspan Marine begins work on the $8 billion federal contract it was awarded last fall to build non-combat vessels.

Manitoba’s agriculture, manufacturing and utilities sectors are expected to perform well in 2012.

In particular, agriculture is expected to bounce back following the 2011 floods. Real GDP in Manitoba is forecast to expand 2.7 per cent in 2012 and 2.6 per cent in 2013.

Housing starts are set to post annual increases over the duration of the forecast, which will help insulate the construction industry from the end of fiscal stimulus spending.

Saskatchewan’s real GDP growth is expected to be 2.6 per cent in 2012 and 3.5 per cent next year.

Mining and manufacturing are among the province’s strongest sectors this year.

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