Prosperity gap to widen, Conference Board says

[ErickMontreal]

Prosperity gap to widen, Conference Board says

Growth in Quebec expected to hit 1.4%

DAVID AKIN, Canwest News Service

Published: 8 hours ago

 

Booming Saskatchewan will lead all provinces in economic growth this year, while Ontario and Quebec will suffer through a difficult year, said forecasters at the Conference Board of Canada.

 

The widening prosperity gap between the West and those in central and eastern Canada presents federal policy-makers with some unique challenges. The West may need policies that slow growth and curb inflation, while central Canada has few inflationary worries but needs some economic stimulus to encourage growth.

 

In its semi-annual provincial outlook, the Conference Board says Saskatchewan's economy is booming thanks to surging commodity prices, particularly oil and potash, and as a result, the provincial economy there will grow by 4.2 per cent this year.

 

In fact, the Conference Board said workers are leaving Alberta and heading to Saskatchewan to make their fortune. The report says that, as a result, retailers in Canada's flattest province may be in for a particularly good year.

 

"The positive labour outlook, combined with lofty wage gains, is spurring a spending spree. Retail sales are expected to soar by 12.2 per cent in 2008," it said.

 

Meanwhile, in Quebec, things will be a bit better this year, where growth of 1.4 per cent is expected.

 

"Since the middle of 2007, the Quebec economy has been at a near standstill. The weakness in the manufacturing sector has eroded economic gains made in other industries,' the report said.

 

Next door in Ontario, where manufacturers had particular trouble coping with the one-two punch of a fast-rising loonie and skyrocketing energy prices, economic growth will be just 0.8 per cent, the Conference Board said.

 

Only Newfoundland and Labrador will see slower economic growth than Ontario this year. After a stellar year in 2007 with double-digit economic growth, the Conference Board said the pace in Canada's most eastern province is stalled. It predicts growth there of just 0.2 per cent this year.

 

Overall, the Conference Board believes Canada's economy will grow by 1.7 per cent.

 

The forecasters at the independent think-tank are much more optimistic than the Bank of Canada, which said last month it believes Canada's economy will grow by one per cent.