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Losing steam, but near the top

Manitoba economy predicted to cool, yet perform well among provinces: BMO

By: Murray McNeill

Friday, Jan. 18, 2013 at 8:06 AM | Comments: 0

TREVOR HAGAN / WINNIPEG FREE PRESS ARCHIVES BMO�s John MacAulay: businesses �optimistic�

The Manitoba economy will shift down a gear this year but will still be one of the country's better performers, according to the latest forecast from the Bank of Montreal.

BMO Economics said Thursday it expects the Manitoba economy to grow by 2.2 per cent this year, with a variety of sectors contributing to the growth.

While that would be almost a half a percentage point below 2012's projected growth rate of 2.6 per cent -- the final numbers for last year aren't in yet -- the bank predicts it will still be better than the national average of two per cent and will be the fourth-best growth rate among the provinces.

The only provinces it thinks will do better are Newfoundland and Labrador (4.5 per cent), Alberta (2.7), and Saskatchewan (2.6). It predicts British Columbia will match Manitoba's growth rate, while the other eastern Canadian provinces will see real gross domestic product (GDP) growth of between 1.3 and 1.8 per cent.

The BMO forecast is in line with the consensus forecast for Manitoba. Jim Hrichishen, the province's assistant deputy minister of finance, told a Winnipeg Realtors Association event on Wednesday the latest consensus from the 10 economic forecasters the province tracks is for 2.2 per cent growth this year and 2.4 per cent in 2014.

BMO is predicting 2.3 per cent growth next year for Manitoba.

In its provincial outlook report, BMO said Manitoba once again will benefit from having such a diverse economy, with the manufacturing, construction, agriculture and energy and mining sectors all expected to contribute to the cause this year.

Although the energy and mining sector is still one of the smaller contributors to the province's overall economic output, the bank noted oil and gas output here has been growing at the fastest pace in the country -- a nearly 18 per cent annualized rate over the last seven years.

"Energy and mining activity should maintain their momentum (in 2013), given still-high commodity prices," said Robert Kavcic, senior economist for BMO Capital Markets.

Kavcic said the manufacturing sector also should enjoy steady growth this year, thanks to the province's diversified industrial base.

"Shipments of transportation equipment hit a record high in July," he noted, "helped by strong global demand for passenger jets and public transit vehicles."

The province's agriculture sector also benefited from 2011's extreme drought conditions in the U.S. Midwest, which drove up grain prices and enabled local farmers to reap significant income gains.

"Businesses are optimistic, as evidenced by the investments that are being made across various industries in Manitoba," added John MacAulay, the bank's senior vice-president for the Prairies and Central Canada.

Year-end data Statistics Canada released Thursday showed nearly $1.22 billion was spent on non-residential construction projects in Manitoba in 2012. That was a gain of 12.6 per cent from 2011, when $1.08 billion was spent on commercial, industrial and institutional projects.

Spending in Canada, by comparison, was essentially unchanged, at $47.5 billion.

BMO said while the western provinces continue to outperform most of their eastern counterparts, the gap between their economic growth rates appears to narrowing.

It said Alberta's growth in the energy sector is being tempered by a lack of pipeline capacity and B.C. has been held back by a softer housing market. And like Manitoba, Saskatchewan is also expected to downshift this year, it added.

By contrast, Ontario's economy is expected to gain momentum into 2014, helped by a lift in the U.S. economy. And Quebec's growth is also expected to pick up, but at a sluggish pace, it added.

murray.mcneill@freepress.mb.ca

National growth forecasts

HERE is the Bank of Montreal's latest forecast for real GDP growth (per cent) for Canada and the provinces:

Jurisdiction2011201220132014

Canada2.62.01.72.3

B.C.2.82.52.22.6

Alberta5.13.42.73.1

Sask.4.93.12.62.9

Manitoba2.02.62.22.3

Ontario1.82.01.72.3

Quebec1.90.91.31.8

New Brunswick0.01.01.61.6

Nova Scotia0.51.51.82.1

P.E.I.1.61.61.51.7

N.L. & Labrador 3.00.54.51.8

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