TORONTO -- An anticipated financial recovery south of the border is likely to help economic growth in Canada, economists said Wednesday, although the U.S. is likely to outpace its neighbour for the first time in years.
RBC Economics raised its estimate for Canada's 2013 economic growth to 1.9 per cent, from 1.8 per cent in March, citing an improving picture on trade and strong corporate balance sheets.
The bank maintained its projection for 2014 growth at 2.9 per cent.
Provincially, the bank predicts Manitoba will see real-GDP growth of 2.7 per cent this year and 2.6 per cent in 2014. This year's growth projection is unchanged from the previous forecast, and is on par with last year's estimated growth rate.
The bank said Manitoba's growth last year was mainly driven by a recovery in agricultural production and a double-digit gain in the mining sector. In 2013, those sectors will continue to grow, but at a slower pace -- four per cent for agriculture and six per cent for mining, versus 15 per cent and about 12 per cent in 2012, it said.
"The expected slack in Manitoba's economy from easing agricultural and mining output this year will be tightened by strong gains in utilities and manufacturing -- the sectors projected to drive provincial growth this year," added Craig Wright, RBC's senior vice-president and chief economist.
RBC's (TSX:RY) estimates for the national economy are higher than the Bank of Canada's most recent outlook for the 2013 and 2014 gross domestic product and several recent forecasts by private-sector and international economists.
As others have noted, RBC says the United States has been more resilient than anticipated in the early months of this year.
"The improving trade balance underpins our forecast for Canada's economy to grow at rates which should help propel the economy to full capacity in early 2015," Wright said.
"Stronger demand for autos, houses and industrial machinery from the U.S. will help sustain the lift in export growth that Canada experienced so far this year for the remainder of 2013."
However, BMO's (TSX:BMO) chief economist Douglas Porter says the U.S. economy will grow at a faster pace than Canada's for the next few years, helped by a comeback in house prices.
"For a number of years, Canada was outpacing the U.S., and now we're in a situation where there's just a lot more pent-up demand in the U.S. than there is in Canada," he said at a Toronto Region Board of Trade event.
-- The Canadian Press