June 30, 2009
Rebound in commodities will aid West: BMO
While the current recession has had a significant and widespread impact on the economies of all Canadian provinces, and almost all will see real GDP contract this year, sights are now set on a coming economic recovery, according to the new provincial outlook report from BMO Capital Markets Economics.
“Thanks to a rebound in commodity prices, widespread fiscal stimulus and some of the lowest interest rates in a generation, all provinces are poised to participate in the recovery,” said Douglas Porter, deputy chief economist with BMO Capital Markets.
Western Canada has been hard hit this downturn, as last year’s plunge in commodity prices and tighter credit conditions slashed investment activity in the energy sector. With job losses mounting, consumer activity has contracted, house prices had fallen by about 15 per cent from peak levels before rebounding in recent months, and residential construction activity has been sliced to less than half year-ago levels. As a result, annual real GDP in B.C. and Alberta is likely to contract for a second consecutive year.
However, the rebound in commodities should breathe some life back into Western Canada in 2010. Production costs have fallen sharply amid slackening labour markets and lower input prices, and oil prices have now moved back above break-even levels for the oilsands ($60-$65). As a result, the region is likely to experience an above-average rebound in 2010 with growth averaging slightly above 2 per cent.
Central Canada continues to grapple with the challenges facing manufacturing, namely significant erosion in foreign demand and, more recently, a rebound in the Canadian dollar.
Ontario’s auto sector came to a near standstill to start the year amid restructuring efforts, and employment in the assembly and parts sectors has fallen to the lowest level since the early-70s.
Quebec’s more favourable manufacturing-sector mix has helped the province better weather the recession. Looking ahead to 2010, the region will likely see a recovery that is in line with the national average, though a rebound in auto production should give a slight tilt to Ontario. Still, the long-term restructuring challenges in the region remain, and should lead to continued underperformance in the medium term.
Atlantic Canada has held up well during this recession thanks to renewed population growth, fiscal stimulus and sturdy non-residential investment activity. While real GDP should decline in all provinces this year, the contractions will likely be less severe than the national average (Newfoundland & Labrador is the exception, amid lower oil output). As 2010 rolls in, the region will likely see a near-average recovery as public- and private-sector investment activity combats ongoing manufacturing weakness.
The recession has quickly altered the Canadian fiscal landscape as the fiscal 2009/10 budget season saw a return to deficit for most provinces.
Only two provinces —Saskatchewan and Manitoba — managed to stay out of the red this budget season. While declining revenues are a major factor behind the deteriorating fiscal position, provincial governments are also committed to maintaining spending growth.
DCN News Services
|MOST POPULAR STORIES|
|TODAY’S TOP CONSTRUCTION PROJECTS|
These projects have been selected from 371 projects with a total value of $1,936,826,394 that Reed Construction Data Building Reports reported on Thursday.
$134,000,000 Toronto ON Prebid
$128,250,000 North York ON Prebid
$100,000,000 Toronto ON Prebid
- VIDEO: Debate still strong as OCOT turns one
- Upset waters over new Ontario diving regulations
- Covering up the Celsius
- Frontier Oilsands Mine joint review panel raises concerns among some First Nations
- Doors open on latest PPP Canada funding
- U.S. builders’ confidence rises but is limited by tight credit and shortages of labour and lots
- Keystone XL opponents carve message
- RFP released to shortlisted teams for Milton hospital expansion
- Photo Gallery: 2014 ACEC BC Awards of Excellence winners
- Journal of Commerce Preview for the week of April 21st, 2014
- Fort McMurray airport terminal getting ready for take off
- B.C. government forms liquefied natural gas working group
- Kitimat residents vote against Northern Gateway pipeline
- Precast concrete enables net-zero homes
- Learning to dig safely can save lives
- Ex construction boss admits to collusion in government contracts
- P3 Fund launches
- Supreme court won't hear case involving construction mogul
- Minister spurns spat over plant