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.