Slower growth in forecast

水管工

Alberta's red-hot inflation rate also expected to cool: RBC report
The Edmonton Journal; with files from Canwest News Service
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EDMONTON - Alberta's oilsands-fuelled economic growth will slow through the next two years, a new RBC report forecasts.

Growth is expected in the low to mid three-per-cent range after peaking at 6.6 per cent in 2006, chief economist Craig Wright said Thursday.

5 v/ b2 K4 f4 ?"While this is by no means slow growth, especially compared to the sub-one-per-cent growth expected in Ontario, it is sharply weaker than the pace of the past few years," Craig said.

9 s7 s. j( r+ z' o6 s"Nonetheless, with oil still hovering near $100 per barrel, and natural gas prices picking up, the key fundamental supports are still intact to keep the province on the high end of the provincial growth charts."
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The good news is inflation, currently twice the national average, will also ease from five per cent in 2007 to below three per cent this year, Wright said.
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1 c4 ~& J9 h2 l* o# m' U8 @House price increases are expected to sit in the mid-single digit range, compared to the 30-per-cent gains in 2006 and 2007.

Business sector growth is also stabilizing as rising wages, higher input costs, and royalty rate hikes curb the attractiveness of capital expansion plans.
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: V. z, `& r4 x: {( o0 tMultibillion-dollar cost overruns have become commonplace, and forced many companies to scale back or cancel projects, Wright said.

Employment growth is forecast to drop from 4.7 per cent last year to 2.2 per cent this year and 1.8 per cent in 2009, while consumer price increases will ease from nine per cent to seven per cent.
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Saskatchewan is expected to be the top performer this year as the energy, mining and agriculture sectors flourish. Alberta should come second.
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# `6 ^! J/ m- P# R/ }1 bNewfoundland and Labrador will have the slowest growth, as offshore oil production declines.

, Z) x9 D7 r" Z4 {) X8 |7 tNationally, RBC says the economy will expand by 1.6 per cent in 2008, down from 2.7 per cent the previous year.

"Rising demand for imports will continue to outstrip export growth in 2008, and we anticipate the trade sector will trim 3.6 per cent from the 2008 annual GDP growth rate," Wright said.

4 B7 T# p( U+ Z"The drag from the trade sector on near-term growth, combined with limited inflationary pressures, will keep the Bank of Canada on its current path of lowering interest rates."

RBC says Ontario, the country's biggest province, will take much of the brunt of the U.S. downturn -- and will "teeter on the brink of recession," with just 0.8-per-cent growth this year, improving slightly to 1.9 per cent in 2009.

"The nationwide hit to Canada's exports will disproportionately affect Ontario because of both its heavy reliance on U.S. demand for its products, as well as the unfavourable composition of those exports that are largely focused on automotive and forestry sector goods," he said.
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"Ontario's exports to the U.S. account for roughly 84 per cent of total exports and about 40 per cent of provincial GDP."
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RBC predicts the U.S. economy will grow by 1.2 per cent this year -- with flat to negative growth in the first six months -- as a result of the country's deteriorating housing sector and market uncertainty.

However, it says the U.S. economy should begin to bounce back by the second half of 2008.
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© The Edmonton Journal 2008