TORONTO, July 30 /CNW/ - Domestic economic prospects are turning
brighter. A number of important factors - unprecedented monetary and fiscal
stimulus, improved financial market conditions, firmer commodity prices, and
strengthening emerging market demand - are helping to revive consumer and
business confidence and activity, according to Scotia Economics' latest
Provincial Trends report.
    "By many indicators, the current quarter will likely mark the end of the
Canadian recession," said Alex Koustas, Economist, Scotia Economics.
"Nationally, we expect real GDP to advance at a 1.5 per cent annual rate in
the second half of the year and an even stronger 3.5 per cent annualized rate
in the first half of 2010. For 2009, we look for output to contract by an
average of 2.2 per cent, but post a 2.5 per cent average gain in 2010."
    According to the report, prospects for Central Canada's large
manufacturing sector should gradually improve over the coming year, with
global demand showing early signs of stabilization. In particular, a boost in
production schedules by the auto sector in the current quarter comes as
welcome relief for Ontario, the province hardest hit by the global economic
downturn. In Quebec, cost-cutting measures and a wide product mix are helping
to mitigate manufacturing losses, while the ramping up of major capital
projects will support growth in 2010.
    Prospects in Western Canada are mixed. Manitoba's steady, diversified
economy, and Saskatchewan's resilient resource and domestic economy are
expected to be growth leaders this year and next. In Alberta, activity is
beginning to percolate once more amid resurgent commodity prices, after a
rough start to the year led to a curtailment in natural gas and oil drilling.
For British Columbia's beleaguered forestry sector, some relief should be
visible by early next year now that the U.S. housing market appears to have
bottomed.
    Eastern Canada's relatively diversified economies should piggyback on the
expected pickup in U.S. demand in 2010, following modest contractions in
output this year. Meanwhile, continued growth in education and business
services are helping to offset weak demand for energy products and declining
industrial production. Lower international tourist visits have been offset by
a rise in trips to the region by Canadians, although the appreciating Canadian
dollar threatens to tip this balance.
    "Nonetheless, there are ongoing risks to the outlook," said Adrienne
Warren, Senior Economist, Scotia Economics. "Competitive issues are being
magnified by a strengthening Canadian dollar, once again testing the 90 cent
(US) threshold. Ongoing restructuring in key industrial sectors will continue
to moderate activity. Meanwhile, still-rising unemployment will likely
restrain the recovery in consumer spending and housing activity."Forecast output growth for provinces:

    British Columbia

    B.C.'s economy is expected to outperform the national average in 2010,
    with growth rebounding 2.7 per cent after a contraction of 2.0 per cent
    this year.

    Alberta

    Alberta's economy is expected to advance 2.8 per cent in 2010, after a
    2.3 per cent contraction in 2009, on the back of rebounding commodity
    prices and subsiding inflationary pressures.

    Saskatchewan

    Saskatchewan is expected to post positive growth of 0.6 per cent this
    year - the only Canadian province to do so - and 3.0 per cent in 2010,
    supported by strength in the resource sector and a relatively strong
    domestic economy.

    Manitoba

    Manitoba is expected to return to 2.5 per cent growth in 2010 following
    one of the smallest economic contractions among the provinces this year,
    at 0.8 per cent.

    Ontario

    Ontario is expected to experience a 2.2 per cent rebound in growth in
    2010, partially reversing a 2.8 per cent retrenchment this year.

    Quebec

    Quebec's real output is projected to expand 2.4 per cent next year after
    a 2.2 per cent drop in 2009.

    New Brunswick

    New Brunswick is expected to recover from a 1.3 per cent decline in
    growth this year, with a 2.4 per cent rebound in 2010.

    Nova Scotia

    Nova Scotia's economy is expected to expand 2.5 per cent in 2010, in line
    with the national average, following a 1.4 per cent contraction this
    year.

    Prince Edward Island

    Prince Edward Island is expected to post modest growth of 1.9 per cent in
    2010, after weathering the recession this year with a contraction of 1.5
    per cent.

    Newfoundland & Labrador

    Newfoundland and Labrador is expected to bounce back with growth of 2.4
    per cent next year, after a similar tumble in 2009.

    Provincial Trends: Regional Prospects Turning Up and other Scotia
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