TORONTO, Feb. 21 /CNW/ - Construction activity and the service sector
will remain growth engines in 2008 amid weakness in export-oriented
manufacturing industries across the provinces, according to Scotia Economics'
latest Provincial Trends report.
    "A combination of factors, heightened foreign competition, a soaring
loonie, and more recently, a weakening U.S. economy, are restraining Canada's
overall economic performance, with the manufacturing sector bearing the brunt
of the slowdown," says David Hamilton, Economist, Scotiabank. "National output
growth is expected to decelerate from an average of 2.6 per cent in 2007 to
1.9 per cent in 2008.
    "At the same time, however, non-residential construction and ongoing
strength in service industries are providing enough forward momentum across
the provinces to offset these headwinds," adds Mr. Hamilton. "Construction
activity, in particular, is receiving solid support from both private and
public sectors, mainly for spending on infrastructure."
    Federal, provincial and municipal governments have announced significant
multi-year infrastructure investments. Faced not only with the need to upgrade
roads, bridges and water treatment systems, Canada is also challenged by a
growing economy and population base. At the provincial level, British
Columbia, Ontario and Quebec propose ambitious longer-term transit
development. Alberta faces a critical need to upgrade the infrastructure
surrounding the oil sands. Quebec is spending a substantial amount on
super-hospital projects, as well as investing in power generation and
transmission facilities. On the East coast, the Atlantic Gateway initiative
aims to increase port activity alongside an improved transportation network.
    "Although most provinces are expected to witness some softening in growth
in 2008, there will continue to be significant regional disparities between
the Western, Central and Atlantic provinces," says Mr. Hamilton.
    Regionally, the West will continue to lead with average growth of three
per cent, underpinned by the booming energy and mining sectors. Central
Canada, mired by weakness in its export-oriented manufacturing sectors, will
trail the national average with 1.4 per cent growth in 2008. Similar to the
West, average growth of 1.8 per cent in the Atlantic provinces will be
supported by the continuing resource boom.

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