We're bucking global slump

The Calgary-based think-tank's latest economic profile and forecast for the province released this morning said the province's diversified economy, which features strong non-residential construction and innovative manufacturing industries like buses and aerospace parts, will help fuel 2.3 per cent growth in 2008 and 2.0 per cent in 2009, according to Canada West.

That prognosis is made under the larger expectation that Canada's economy will continue to contract until mid-2009, pushing the jobless rate above eight per cent and robbing Canadians of more than $50 billion in income. That is what the TD Bank projected Wednesday, abandoning a previous, more optimistic scenario.

"We are witnessing a rare instance in history of a synchronized global recession," the bank said in its grim forecast, issued in the wake of the Bank of Canada's acknowledgement this week that Canada is entering a recession. "At the heart of the global recession is the ongoing difficulties in credit markets, which know no borders."

The TD's pessimistic forecast sees the U.S. economy suffering its most severe recession since the 1980s, shrinking by nearly two per cent next year, and the global economy expanding only 0.5 per cent, its weakest performance in nearly a half a century, it noted.

"Tumbling commodity prices will have a unique impact on the real Canadian economy... the equivalent of shaving $51 billion from domestic income," noted the TD forecast, which projects a 1.4 per cent contraction here.

But Jacques Marcil, senior economist with Canada West and the author of the Manitoba profile, wrote "Manitoba has a number of things going for it." In an interview he said the big non-residential construction projects will continue to be bright spots for Manitoba in 2009.

"Projects like the Wuskwatim hydro generating dam are quite sheltered from the U.S. problems," he said. "They are not going to be able to stop construction halfway through like they might do to a condo project in downtown Toronto."

He said one of the signs that Manitoba economy continues to exhibit strength is population growth.

In another national survey, the loss in income will be especially steep for a growing number of workers who will lose their jobs.

That survey by consulting firm Watson Wyatt found that 44 per cent of employers have made or are planning layoffs or staff reductions, a finding that suggests last month's loss of 71,000 jobs, the worst in more than a quarter-century, was the tip of the iceberg.

The November survey of 138 Canadian-based companies from various sectors also found that four in 10 will also freeze new hires, while almost one-third have made or will be going through organizational restructuring, though less than 20 per cent of those consider the staff changes significant.

"Although there is a high level of uncertainty in the market, employers are cautiously moving forward to deal with the challenges of the economic downturn," said Liz Wright, a compensation expert at Watson Wyatt Worldwide.

And according to the TD Bank forecast, it's a downturn that will continue to deepen through the first two quarters of next year, pushing the national jobless rate, now at 6.3 per cent, to 8.2 per cent by the end of 2009.

The fall in commodity prices, meanwhile, will continue to weigh heavily on investment income as well as employment earnings, it said.

It projected that the S&P/TSX composite index, which fell 46 per cent by late last month, will sink another 20 per cent.

martin.cash@freepress.mb.ca

-- with files from Canwest News Service

Recession? What recession?

2.3% Percentage of growth Calgary think-tank Canada West Foundation predicts for Manitoba in 2008

2% Percentage of growth Canada West Foundation predicts for Manitoba in 2009

WHY? Thank Manitoba's diversified economy, which includes:

• Non-residential construction -- like the Wuskwatim hydroelectric dam project.
• Innovative manufacturing sector -- like bus and aerospace parts factories.

Republished from the Winnipeg Free Press print edition December 11, 2008 A8