TD Economics releases its latest forecast for provincial economic performance [PDF] and, if there's anything encouraging about it, it's that things are not likely to get worse. Are they getting better? Not much, according to TD economist Pascal Gauthier.
Some excerpts:
“A slumping U.S. economy, weak commodity prices and increasingly cautious consumers across the nation have meant there has simply been no place to hide [but] the major pieces of the economic and financial puzzle seem to be falling into place for a recovery, albeit modest, to start taking hold late this year..”
“While Ontario, British Columbia and Alberta have already been hit with significant job losses, we believe Québec and the Atlantic region might have some unfortunate catch up with further losses to come in the months ahead.”
The real gross domestic product or the sum of all provinces is forecast to shrink this year. (TD chart on the left) Real GDP is the sum of all economic activity in a region after adjusting for the effects of price inflation.
Manitoba's economy will shrink by just 0.7 per cent while Newfoundland and Labrador's economy will shrink by 4 per cent.
Next year, TD says, it will get a bit better with all provinces seeing real GDP provinces, led by B.C. which should post 2.1 per cent GDP growth. Every economist has a different view of what they consider healthy GDP growth but most would say that, for Canada, healthy growth is in the 2-3 per cent range. TD believes Canada's GDP growth in 2010 will be well below that at just 1.4 per cent. And, with the exception of B.C., no province is expected to see growth of two per cent.
All of which adds up to what could be long, slow, tepid recovery.
“All said, we do not find potent enough drivers that would convince us there will be significant regional differentiation during the initial economic recovery phase. Following a severe recession in most parts of the country, the foundation for a more robust and sustained recovery will be laid from coast to coast. Among other factors, we will look to local housing markets, net migration flows, consumer, business, and government investments and balance sheets to see which regions build a firmer foundation than others, which will drive wedges in performances beyond next year.: