OTTAWA — British Columbia will top the country in economic growth next year in large part because of a gold-plated boost the province is getting from hosting the Winter Olympics, the Conference Board of Canada says.
The Ottawa think tank’s provincial outlook released Thursday forecasts B.C.’s economy will leap forward by 4.2 per cent next year after being one of the provinces hardest hit by the recession.
Only Saskatchewan, a prairie province rich in energy, minerals and grains, will come close to B.C. for growth next year at 3.7 per cent, says the Conference Board.
‘There’s going to be increased tourism activity and all the spending associated with the Olympics, and that will generate a lot of employment,” explained Marie-Christine Bernard, who authored the report. She said the Olympic effect alone will boost the economy by up to 0.8 per cent.
In a previously released forecast, the Conference Board had projected the Canadian economy as a whole would shrink by 2.1 per cent this year and grow by 2.9 per cent in 2010, an estimate that is about level with the Bank of Canada’s projections but more optimistic than most private economists.
In its report, the Conference Board said the Canadian economy will keep expanding to 3.6-per-cent growth in 2011, better than the 3.3 per cent the central bank has predicted.
Thursday’s outlook contains a more detailed analysis of the economy, including how national and global developments will impact each province.
‘Most provinces are struggling to exit recession,” the report states. “The recovery is still fragile and not firmly entrenched, but the weakness is expected to dissipate in the next few months.”
One of the strengths going forward is the billions of dollars Ottawa and the provincial governments are pouring into infrastructure projects, the report states.
Although the report says there is little evidence of the money boosting the economy currently, it expects the spending will forge ahead in the final weeks of this year and peak in 2010.
The report shows that the recession, while it was painful generally and cost about 400,000 jobs, did not affect all regions the same way. Nor will the recovery be uniform, the think tank says.
The most surprising projection is that the Conference Board expects Ontario, which was hardest hit by the recession, to rebound relatively strongly next year by 3.2 per cent, and post an even stronger advance in 2011.
The report notes that Ontario was likely among the first provinces to fall into recession in mid-2008 and took the overall biggest hit, with a peak-to-trough contraction of 4.5-per-cent. That is much worse than the 3.3 per cent the recession has taken out of the Canadian economy as a whole.
Ontario saw its manufacturing sector battered in the last year, primarily because of the deep restructuring in the auto industry, which led to plant shutdowns and the loss of thousands of assembly and parts jobs in Canada’s manufacturing heartland.
The high dollar also hurt exporters, leading to retrenchment in the forestry, machinery and other sectors.
‘The U.S. recession paralyzed production around the auto industry and the manufacturing sector as a whole,” said Bernard. “But next year we have a recovery in the U.S. and that will help manufacturing (in Ontario).”
Still, Ontario fell so hard and so deep, she added, that it will need even stronger growth just to catch up to the rest of the country.
Alberta also suffered badly during the slump, but higher oil prices and continued oilsands development should boost the economy by three per cent next year.
Quebec was not as hurt, suffering a relatively modest 1.4-per-cent decline in 2009, largely because the provincial government was more aggressive in pushing forward infrastructure spending, which helped offset job cuts in forestry.
The downside, however, is that the province’s economy will grow more slowly next year at about 2.4 per cent.
The think tank says Manitoba and the Maritime provinces managed to avoid a recession altogether this year, but their growth will be modest next year.
Only Newfoundland will fail to emerge from recession next year, says the Conference Board, as declining offshore oil production and weaker construction will again shrink the economy by 0.5 per cent, after falling 3.6 per cent this year.