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Forecaster hikes province's GDP growth outlook

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One of the country's leading economic forecasters has bumped up its growth projections for Manitoba for this year.

The Conference Board of Canada is now forecasting real gross domestic product (GDP) growth of 2.1 per cent for 2014, which it predicts will be fourth best among the provinces. That's also three-tenths of a percentage point more than it was forecasting in March, when its last quarterly forecast was released.

Last week, the Royal Bank also predicted 2.1 per cent growth this year for Manitoba.

The main reason for the conference board's upgrade is an increase in infrastructure spending, board economist Natalia Ward said in an interview Tuesday, noting the Manitoba government has committed to spend $5.5 billion over the next five years on infrastructure projects.

"Infrastructure spending will help overall construction spending for this year."

Ward said Manitoba's manufacturing industry should also see healthy production gains this year, thanks to a strengthening U.S. economy and a weaker Canadian dollar. Both are helping to make Manitoba-made goods more attractive for U.S. buyers.

Two types of products in particularly strong demand right now are transit buses and aerospace parts and components, Ward said, noting the cities of Ottawa and Vancouver both recently placed big orders for New Flyer Industries buses.

While the prospects look good for construction and manufacturing, the conference board said Manitoba's mining and agriculture industries are both facing strong headwinds that will limit their growth in 2014.

Ward said both are looking at weaker commodity prices and delays in getting their products to market because of an ongoing rail-transportation backlog. She noted Manitoba's agriculture sector has enjoyed double-digit growth the past two years and it's difficult to maintain that pace, especially in the face of lower grain prices.

While mining output is also expected to decline this year, the board is predicting a robust 7.3 per cent growth rate for 2015 as two new mines will have their first full year at full production.

Although the conference board upgraded its growth forecast for this year, it also slightly downgraded its forecast for next year. It's now forecasting real GDP growth of 2.8 per cent for Manitoba in 2015, instead of the country-leading three per cent it was forecasting in March.

Ward said the main reason for the downgrade is the expected decline in agriculture output from the heady levels of 2012 and 2013. It now expects Manitoba to post the third-best growth in 2015, behind Alberta's 3.1 per cent and British Columbia's 2.9 per cent.

Nationally, the board is forecasting real GDP growth of 2.1 per cent this year for Canada and 2.6 per cent growth for 2015. It said Alberta is also expected to lead all provinces this year, with growth of 3.5 per cent.

"Economic prospects have brightened for several provinces, as the expected strengthening in the U.S. economy will help boost real GDP growth on this side of the border over the next two years," said Marie Christine Bernard, the report's author.

 

-- with files by The Canadian Press

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition June 18, 2014 B4

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