MONTREAL — Of Canada’s most populous provinces one is emerging in better shape from the global recession, says a report by the TD Bank Financial Group.
The findings could surprise people: that fortunate place is not the industrial heartland of Ontario, nor British Columbia, or the vast oil patch of Alberta.
While other provinces may spring to mind as Canada’s economic heavy-hitters it’s Quebec that has escaped this recession with the fewest dents, TD says.
The bank says Quebec still faces serious long-term challenges — like an aging workforce and large public debt — but should find reason for optimism in its recent economic performance.
“Although the recession has been brutal in some parts of the country particularly in Ontario, Alberta and British Columbia so far Quebec has been able to avoid the worst,” TD chief economist Don Drummond said in a statement Tuesday.
“A return to growth later this year will mark the end of a relatively short and weak recession in Quebec compared to the recessions of the 1980s and 1990s.”
While the rest of Canada posted zero growth in the second quarter of 2008, the report says, Quebec’s economy rose at an annual rate of two per cent.
Over the course of the recession, TD estimates that Quebec’s peak-to-trough output change will be -2.3 per cent, compared with -5.3 per cent for the rest of Canada.
Employment dropped 1.8 per cent in Quebec since last October, compared with a 2.6 per cent plunge in the rest of Canada.
Drummond said it would have been difficult to imagine, before the recession, Quebec riding it out so aptly.
TD economist Pascal Gauthier co-authored Tuesday’s report titled An Update on the Quebec Economy .
In an interview, Gauthier noted that a pair of central Canadian provinces — Manitoba and Saskatchewan — were faring even better than Quebec.
But in his report comparing the four most populous provinces, Gauthier suggested that Quebec’s ability to shake off the downturn could signal a promising run.
“Recessions do happen and the ability to withstand them a little bit better than others can matter for an extended period of time,” Gauthier said.
“It’s starting in the recovery phase on better footing and that does mean that Quebec households will be arguably in a better position.”
Gauthier said Quebec also managed to narrow its gap with the rest of the country last year in terms of per capita GDP, a divide that’s been widening steadily since 1981.
In 2007, Quebec’s per capita GDP was $34,297 (in 2002 dollars), compared to $39,736 for all of Canada, according to Statistics Canada.
But that gap also explains part of Quebec’s relative success this year.
The absence of an auto industry, less jumpy housing prices, and less presence of volatile resources like oil helped insulate Quebec from the wild economic swings seen in other provinces.
Gauthier credited Quebec’s stable housing prices with propping up consumer confidence and household consumption.
He also said Quebec was spared because it no longer has much of an auto industry, relying instead on manufacturing in areas that have held up better — like aerospace and pharmaceuticals.
“Every sector’s been affected, there’s no doubt. Even the high-flying aerospace industry has felt the bumps and the knocks — but it’s largely a cyclical, rather than a structural, issue,” he said.
The financial group also found that Quebec benefited from the billions it invested in infrastructure projects, many of which were already underway when the recession struck.
On Tuesday, Premier Jean Charest said he’s taking the good news with a grain of salt. He said any recovery at this stage appears fragile, and nobody knows whether it’s a real rebound or a momentary blip.
But he still managed to pat himself on the back.
“Quebec has done better in this economy, frankly, than the rest of the world,” Charest said in Bromont, Que., where he announced a $218-million federal-provincial investment in a microelectronics centre.