Manitoba's economy is set to grow 3.2% next year according to RBC Economics latest
provincial outlook. Assistant Chief Economist Paul Ferley says an expected return to
more normal growing conditions in 2012 will shift the agricultural sector into a sharp
recovery, while most other sectors will perform reasonable well. He says they expect
the ag sector to grow by about 19%.
"Most other areas of the economy will grow reasonable well with continued strength in
manufacturing, construction a bit more on the weak side," says Ferley. "The province
seems to be in a bit of a lull in terms of construction activity with a number of major
projects completed earlier on."
The report points to the expansion of the Winnipeg International Airport, and the
enlargement of the Red River Floodway as examples. Similarly, spending on hydro-electric
projects is expected to slow with the $1.2 billion Wuskwatim Generation Project
scheduled for completion in early 2012.
Manitoba's projected growth compares to Saskatchewan's 4.2% and Alberta's 3.9%,
while the Canadian economy as a whole is expected to grow by 2.5% next year. The
report states Manitoba is showing the weakest performance of the three Prairie provinces
largely due to the province's smaller exposure to the oil and gas sector.
"In terms of natural resource production, it's really the base metal that plays a greater
role in the province in terms of the sort of commodity price boom that we're experiencing
right now nationally," says Ferley. "In Manitoba it's more of a base metal phenomena,
though you are seeing some pick up in that oil production."
That strengthened oil production is coming from a small portion of the Bakken oil formation
extending into the southwest corner of the province.
A big factor that's always looked at when discussing the economy is housing starts,
a figure the RBC report is suggesting will dip just slightly next year.
"We've got housing starts holding in at around five and a half thousand through the
forecast period, now that will be a little bit down from 2010 when activity rose to
almost six thousand units," says Ferley. "The five and half thousand, I mean we're
up from the recession lows, so it's reflecting solid gain."
In 2010 there were approximately 5,900 housing starts in Manitoba, and RBC is
forecasting 5,600 for 2011, 5,500 for 2012, and 5,700 for 2013.
Meanwhile, looking back at 2011 RBC is estimating the Manitoba economy will
grow 2.5% with Ferley saying the economic landscape is really a mixed picture
with considerable weakness coming from the agricultural sector.
"Growing conditions really were plagued by bad weather through the year,
starting out with conditions too wet, and then getting hit by extreme sort of warm
temperatures really hampered production," says Ferley. " We are expecting a fairly
significant drop in agricultural production of almost seventeen percent."
Ferley notes it's not all bad news for the Manitoba economy this year.
"The manufacturing sector continues to hold up, benefiting from continued growth
in the U.S.," says Ferley.