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Winnipeg Free Press - PRINT EDITION

Manitoba to lead pack: bank

Only province that will show economic growth this year, report predicts

By: Murray McNeill

3/09/2009 1:00 AM | Comments: 0

Manitoba will be the only province to post any economic growth this year and will be one of the country's better performers in 2010, according to Laurentian Bank.In its Provincial Monitor report issued Wednesday, the chartered bank predicts the Manitoba economy will grow by 0.3 per cent this year, compared to projected declines of 0.2 per cent to 3.9 per cent for the other nine provinces.

"Manitoba and Saskatchewan are breezing through the economic and financial crisis with an ease that must make other regions envious," said the report's author, economist Sébastien Lavoie.

Lavoie said Manitoba's strength during the recession has been its diversified economy, while Saskatchewan's has been its strong population and employment growth.

He said while it's unusual for one province to dodge a recession while the rest struggle, it's not unheard of -- British Columbia did it during the recession of the early 1990s.

Lavoie said he also doesn't foresee any major recessionary hangover for Manitoba in 2010. He predicts the province will tie Nova Scotia for the third-strongest GDP growth in the country at 2.2 per cent. The only provinces he expects will do better are Saskatchewan at 2.9 per cent and Alberta at 2.5 per cent.

Laurentian is one of 10 economic forecasters the provincial government tracks. Its prediction is on the rosy side, with the average so far a 0.2 per cent decline in GDP growth this year, and a two per cent increase in 2010.

The report also predicts Manitoba will be one of only four provinces to post any employment growth next year (only 0.1 per cent), that it will continue to boast the second-lowest unemployment rate (6.5 per cent), and that it will ring up the fourth-largest increase in retail spending (2.6 per cent).

Lavoie said the biggest threat the province faces in 2010 is the slow and uneven economic recovery in the United States -- its biggest export market.

"The recent step back in capital spending measures of cash-strapped U.S. states is a risk that could put a dent in Manitoba's manufacturing output," he writes. "Still, the road should be much smoother and stable for Manitoba than most provinces."

He said Manitoba's and Saskatchewan's strong economies also mean solid fiscal health for the two provinces this year, with both expecting to balance their budgets.

The bank's report suggests there is a light at the end of the tunnel for most of the other provinces, too, although many will face the tough choice of cutting programs or raising taxes.

"Provincial governments have kicked stimulus plans into gear, while most regions experienced renewed strength in the resale housing market and a pick-up in consumer spending," Lavoie writes.

In Central Canada, a resurgence in the automotive sector will give Ontario a boost, though it will continue to suffer because of the number of high-quality jobs lost this year.

-- With files from Canwest News Service

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 3, 2009 B5

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