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BMO Financial Group

September 30, 2011 07:30 ET

Atlantic Canada's Growth Challenge

HALIFAX, NOVA SCOTIA--(Marketwire - Sept. 30, 2011) - After strong relative performance during the recession, Atlantic Canada will again face a period of below average economic growth, according to a new report from BMO Capital Markets Economics released today Atlantic Canada's Growth Challenge.

"Atlantic Canada waded through the recession in relatively healthy shape, helped by aggressive fiscal stimulus and ongoing private-sector investment, and was able to sustain average growth at a 2.1 per cent annualized pace over the past decade, slightly outperforming the 1.9 per cent national average over the same period," indicated Robert Kavcic, Senior Economist, BMO Capital Markets. "However, as stimulus turns to restraint, growth will be pressured by a combination of higher tax burdens, declining capital spending and sluggish labour force growth," said Mr. Kavcic, while noting that the strong Canadian dollar and sluggish U.S. growth will also restrain activity in the export sector.

"Atlantic Canada has the most challenging demographics of any region of Canada, with trade most concentrated in countries and regions that are not beneficiaries of the global economic gravity shift," said Kevin Lynch, BMO Vice Chair and a leading organizer of the 4Front Atlantic Conference that will bring together 175 business and academic leaders from Atlantic Canada on October 7 in Halifax. "We must leverage our competitive advantages, develop new markets, create an Atlantic Canada brand and enhance the value added of the products and services we sell abroad," added Mr. Lynch, inviting Atlantic Canadians to listen in to the first instalment of this annual conference via webcast.

The BMO report provides an economic outlook for 2011 and 2012 as well as overview of the fiscal situation of each province in Atlantic Canada. Highlights of the BMO report include:

  • Newfoundland & Labrador leads the region with 3.5 per cent growth in 2011 and Nova Scotia expected to lead in 2012 with 1.9 per cent growth.
  • Employment is growing fastest in Newfoundland & Labrador with growth rates of 3.9 per cent in 2011 and 0.9 per cent in 2012.
  • Nova Scotia features the lowest unemployment rate in 2011 and 2012, 9.1 per cent and 9.2 per cent, with Newfoundland & Labrador posting the highest rate in 2011 at 12 per cent and Prince Edward Island the highest in 2012 at 12.2 per cent.
  • Nova Scotia leading in housing starts in 2011, with a growth rate of 4.2 per cent, and New Brunswick leading in 2012 at 3.7 per cent.
  • Consumer prices are expected to rise most in Nova Scotia in 2011, 3.6 per cent, and in Newfoundland & Labrador in 2012, 1.9 per cent.

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

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