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BMO Financial Group

June 22, 2010 09:00 ET

Manitoba Well-Positioned for Emerging Recovery-BMO

- Economic growth of 3.0 per cent in 2010 and 3.1 per cent in 2011

- Mining and agriculture provide good growth prospects

- Pickup in population growth will support retail sales and housing

WINNIPEG, MANITOBA--(Marketwire - June 22, 2010) - With a diverse economy that experienced a softer recession compared to other provinces, Manitoba is well-positioned for the emerging economic recovery, according to the Provincial Outlook report from BMO Capital Markets Economics (TSX:BMO)(NYSE:BMO). "The province's economy contracted just 0.2 per cent in 2009, and is expected to advance 3.0 per cent this year and 3.1 per cent in 2011," said Robert Kavcic, Economist, BMO Capital Markets.

Nonresidential construction activity has been a pillar of strength in Manitoba in recent years, but is expected to fade slightly in 2010. After growing at a double-digit pace for the past four years, non-housing capital spending is expected to dip 1.5 per cent in 2010 as a number of infrastructure projects wind down. Still, large-scale investments by Manitoba Hydro, including the $1.3 billion Wuskwatim generating station, will continue to provide economic support over the medium term.

Mining and agriculture will provide good growth prospects for Manitoba; as an example, HudBay's Lalor Lake mine holds about 3 million ounces of gold, and the company plans to spend $500 million on the project in the next few years. Meantime, population growth has picked up and is running ahead of the national rate for the first time since the early-1980s, which will continue to support retail sales and housing demand.

The government of Manitoba is projecting a $545 million summary deficit in fiscal 2010/11, and the Province is anticipating four years of deficits before returning to a $185 million surplus in fiscal 2014/15. Starting at 1 per cent of GDP, Manitoba's deficit will remain relatively small, and a moderation in spending growth and the economic recovery should help the province grow its way back into the black.

The complete report can be found at www.bmocm.com/economics.

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