TORONTO, July 19 /CNW/ - Canada's economic performance remains tilted
westward through 2008, but strong domestic-led activity will sustain growth
across all provinces, according to Scotia Economics' latest Provincial Trends
report.
    "Canadian real GDP growth is expected to average around 2.5 per cent in
2007 and 2008, roughly half a percentage point below the average of the
previous three years," says David Hamilton, Economist, Scotiabank. "While this
should largely mirror both the slowdown in the U.S. economy and the
growth-robbing shortage of labour and selected materials, it obscures three
key trends that are continuing to dominate Canada's underlying performance."
    "First, the pace of economic activity remains two to three times greater
in the resource-rich regions in the west, north and east," adds Mr. Hamilton.
Export-sensitive manufacturing-centric provinces in Central Canada remain
constrained, not only by the U.S. slowdown, but by the loss of competitiveness
associated with increased foreign competition and an even stronger Canadian
dollar.
    Second, in all provinces, domestic-led activity remains fairly robust,
led by consumer spending, non-residential construction, and services. "Even in
Ontario, where average output growth this year and next of 1.9 per cent will
lag the national average for a fourth consecutive year, final domestic demand
is expected to advance at close to a three per cent rate," says Mr. Hamilton.
    And thirdly, infrastructure spending will remain a key driver of domestic
growth across the nation. Besides the much-needed outlays in health and
education, there is a renewed push to upgrade transportation networks and
ports, in addition to new green initiatives.
    Regionally, growth in the Western provinces should continue to pace the
national advance. Newfoundland & Labrador could best the other provinces this
year as its mining sector recovers, but is expected to cool off in 2008. On
average, Alberta and B.C. remain at the top of the pack, boosted by mining and
oil and gas extraction, while Ontario and Quebec face further restructuring in
their large manufacturing sectors.

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