This is an interesting perspective from the Royal Bank of Canada. Nice to see that they feel Ontario will narrowly miss a recession. News out of the US today is that their interest rates will be dropping over the next few quarters to combat the slowdown in the economy that is mostly caused by the real estate slowdown in the US.
Should be interesting to see how our local GTA economy fares over the next couple of quarters. I feel that we will have a more 'normal' real estate market, no boom or bust.
All the best,
Mark
Ontario slips to last place in growth ranking
We have revised our 2006 Canadian growth forecast significantly downward as a result of a sharp downgrade to Ontario's outlook putting it in last place among the provinces, an upgrade of Alberta and British Columbia to first and second place, respectively, and bumping Newfoundland to third place.
We think Ontario will narrowly avoid a recession and post its weakest growth rate since 2003. Manufacturing is contracting in high-cost labour-intensive sectors, improving productivity shortfalls in others, and is awaiting higher auto production in 2008 due to recent investment announcements. All this despite energy price relief and being one year from an election.
Quebec’s economy is expected to put in a stronger growth performance than Ontario this year and next. While central Canada’s housing markets cool, Quebec’s different manufacturing mix is holding up more firmly.
Despite a sharp pull-back in gas prices throughout 2006 and recently falling oil prices, Alberta’s economy tops the charts on many growth indicators. Look for modestly cooler growth and smaller fiscal surpluses next year.
British Columbia’s economy is forecast to put in a second-place growth performance this year and next as diversified drivers outweigh some negative parallels to a decade ago.
A much better year for agriculture, combined with healthy minerals mining and oil sectors, will likely keep Saskatchewan above Manitoba in the growth ranking this year despite the latter’s sources of strength.
With both White Rose and Voisey’s Bay in their first full year of production, Newfoundland should have surged to first place on growth this year. Instead, technical problems at Terra Nova will drop Newfoundland to third place in 2006 with upside for 2007 as production recovers. This stands in stark contrast to more moribund growth prospects among its Atlantic neighbours.
Employment growth will soften next year across most markets as rising wages cool in the west and softening economies catch up to jobs in the east.
Retailers will see slower growth but should be able to successfully weather the impact of cooler housing markets because of otherwise decent spending supports.
Higher interest rates and the exhaustion of pent-up demand are cooling housing markets in central Canada and will do the same elsewhere next year.
RBC Economic Research’s Provincial Current Trends tracking monthly developments in labour, consumer and business markets, and inflation for each Canadian province. The quarterly provincial forecast report is available here: http://www.rbc.com/economics/market/digest.html
Source: "Financial Markets Monthly", Economics Departnment, RBC Financial Group.
For more information please contact A. Mark Argentino
>A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS 905-828-3434
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