BMO Financial Group

BMO Financial Group

January 17, 2013 10:00 ET

BMO Economics: Canada's Regional Divide Narrowing

- Projected national growth of 1.7 per cent in 2013

- Newfoundland & Labrador to lead the country with 4.5 per cent growth this year

- Resource sector continues to fuel growth in Western Canada

- U.S. recovery to create momentum in Central Canada

TORONTO, ONTARIO--(Marketwire - Jan. 17, 2013) - Canadian economic performance continues to vary widely by region, but the gaping divide between growth rates in Western Canada and the rest of Canada appears to be on a narrowing trajectory, according to the Provincial Monitor report released today by BMO Economics.

"The resource sector continues to fuel solid growth in Western Canada, but Alberta's economy is expected to downshift further this year to a sub-3 per cent pace from 3.4 per cent in 2012 and torrid 5.1 per cent growth in 2011," said Robert Kavcic, Senior Economist, BMO Capital Markets. "While the energy sector is still humming, growth has been tempered at the margin by a lack of pipeline capacity, including still uncertain development prospects and a deep discount for Canadian heavy oil prices. British Columbia, with its weakening housing market, as well as Saskatchewan and Manitoba are also expected to downshift this year, narrowing the gap between the West and the rest."

Central Canada continues to face a handful of challenges, including fiscal restraint, a stronger-than-parity loonie and sluggish U.S. demand in the first half of 2013. "Ontario's economy will likely decelerate to a sub-2 per cent pace this year," noted Mr. Kavcic. "However, as the bulk of U.S. fiscal restraint runs its course and recovering U.S. home prices spin a positive feedback loop into construction and consumer spending, Ontario's economy should gather momentum into 2014. Meanwhile, Quebec's expected provincial-low growth rate should turn up, albeit to a still-sluggish 1.3 per cent pace."

The strong loonie and public-sector capital spending retrenchment continue to depress growth in Atlantic Canada, with a few exceptions. "Preparatory work for Nova Scotia's $25 billion Federal shipbuilding contract continues, and growth in the province will be well supported over the medium term," stated Mr. Kavcic. "Meantime, despite offshore maintenance stalling real GDP in Newfoundland & Labrador last year, underlying trends remain healthy, and real GDP growth should pace the country this year; Exxon Mobil's announced go-ahead of the Hebron project is a bright spot."

"Several regions of Canada continue to perform well, but businesses across the country need to remain adaptable to change," said Steve Murphy, Senior Vice President, Commercial Banking, BMO Bank of Montreal. "With the strength of the loonie, the availability of business credit, and the favourable interest rate environment, now is an excellent time for businesses to make investments that will enhance their productivity over the long term."

Real GDP Growth Rate (per cent):

2011 2012 2013
Canada 2.6 2.0 1.7
BC 2.8 2.5 2.2
Alberta 5.1 3.4 2.7
Saskatchewan 4.9 3.1 2.6
Manitoba 2.0 2.6 2.2
Ontario 1.8 2.0 1.7
Quebec 1.9 0.9 1.3
New Brunswick 0.0 1.0 1.6
Nova Scotia 0.5 1.5 1.8
PEI 1.6 1.6 1.5
Newfoundland & Labrador 3.0 0.5 4.5

The full Provincial Monitor can be downloaded at

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $525 billion as at October 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.

Contact Information