Financial Post OTTAWA
- Saskatchewan will have the standout economy in 2010 as the provinces
start to dig themselves out of recession, says a report from Laurentian
Bank.
While
the report suggests there's a light at the end of the tunnel for most
provinces, economist Sebastien Lavoie, nonetheless, concludes that many
will have to face the tough choice of cutting programs or raising taxes
in order to rein in spending.
"Provincial
governments have kicked stimulus plans into gear, while most regions
experienced renewed strength in the resale housing market and a pick-up
in consumer spending," writes Mr. Lavoie in the Provincial Economic
Outlook released Wednesday, suggesting the provincial economies are
getting back on track.
Saskatchewan
and Manitoba both have weathered the recession with "an ease that must
surely make other provinces envious," said Mr. Lavoie. Manitoba fared
well because of its diversified economy and Saskatchewan because of
strong population and employment growth.
"These
positive trends, coupled with an eventual bounce-back in demand from
emerging markets for potash and uranium, should pull Saskatchewan out
of recession during 2010 and help it record one of the strongest
expansions among the provinces."
In
Central Canada, a resurgence in the automotive sector will give Ontario
a boost, though it will continue to suffer because of the number of
high-quality jobs lost this year.
The
"central Canadian manufacturing-export sector is . . . unlikely to
return ‘to normal' anytime soon, due to the rebalancing currently
underway in global demand."
Mr.
Lavoie expects Alberta to outperform British Columbia in the coming
months because of its relatively lower household debt ratio and higher
oil prices. He notes British Columbia will try to compensate for job
losses in its traditional forestry, fishing and construction sectors by
aggressively competing in the natural gas market, where prices are
already reaching record lows.
In
Atlantic Canada, provincial government infrastructure spending is
expected to keep economies stable, though Lavoie notes that since a
number of these projects have already been completed in New Brunswick,
2010 will be a "tough year" in that province. He says new oilfield
discoveries off Newfoundland and Labrador mean good longer-term
prospects there.
He
cautions that deficits in most areas will be larger than forecast,
while tax and royalties from natural resources will be lower than
expected.
"For
several provinces, the economic recovery will not be enough to alone
pull their budges back into balance over the medium term. Therefore,
choices on the fiscal front will need to be made: either spending will
need to be constrained seriously, or taxes will have to go up."