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BMO Financial Group

February 16, 2012 06:00 ET

BMO Blue Book: New Brunswick Growth Holding Steady in 2012; Businesses Cautious

FREDERICTON, NEW BRUNSWICK--(Marketwire - Feb. 16, 2012) - Economic growth in New Brunswick has slowed after a firm post-recession rebound but will hold steady for the year ahead, according to the BMO Blue Book released today by BMO Capital Markets Economics and BMO Commercial Banking. Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the expertise of BMO's economists with information on current business conditions provided to BMO's commercial bankers by local businesspeople.

"Spending restraint, combined with modest U.S. economic growth, will result in growth of 1.5 per cent for 2012," said Robert Kavcic, Economist, BMO Capital Markets.

Mr. Kavcic noted the impact of soft U.S. growth, with exports and manufacturing activity downshifting after a strong performance in 2011. "New Brunswick has the distinction of being Canada's most export-dependent economy, with about 85 per cent heading south of the border to the U.S."

In the New Brunswick business community, the best news appears to be the announcement of the new Canadian Navy shipbuilding contract for the Halifax Shipyard, next door in Nova Scotia. "Despite the distance between the project site and these businesses, the spinoff opportunities are clear," said John Duff, Area Manager, Commercial Banking, New Brunswick / Prince Edward Island, BMO Bank of Montreal. "Saint John, as an example, remains home to several companies that were involved in the frigate program 20 years ago. These firms still possess key expertise that can support the project in the years ahead."

Mr. Duff noted, however, that a number of New Brunswick businesses are wary. "We're hearing from customers who think the provincial government's $10 billion debt will lead to tax increases to make up the shortfall; this has led to some uncertainty about the business environment," he added.

The full BMO Blue Book can be downloaded at http://bmonesbittburns.com/economics/reports/20120216/bb201202.pdf.

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