RBC forecasts modest growth for Quebec in 2006
Manufacturing sector continues to cope with downward pressures
MONTREAL, June 22, 2006 — Quebec's economy is
expected to grow by 2.5 per cent in 2006 and 2.3 per cent
in 2007, while its manufacturing sector continues to face
multiple headwinds, according to the latest provincial economic
outlook released today by RBC Financial Group.
RBC notes that for Quebec's manufacturing intensive economy,
the combination of a strong dollar, soaring energy commodity
prices, and stiff international competition have contributed
to a marked slowdown in investment spending throughout Quebec
over the past year.
"Quebec's economic growth remains modest relative to
the national average," said John Anania, assistant chief
economist, RBC. "However, if commodity prices other than
energy stabilize, and the expected Canadian dollar correction
takes place, this should provide some relief to Quebec's vital
manufacturing sector."
According to the report, a renewed global interest in air
travel has helped revive production of transportation equipment
in Quebec. In fact, manufacturing activity has been supported
over the last year, by demand in the transportation, metals
and high-tech industries. Together they account for more than
one-third of the province's manufacturing sector. Quebec's
furniture and related wood industries are among the sectors
that have been hammered by low-cost competitors such as China.
While these are relatively small industries, the effects upon
some towns are stark.
For Quebec's residential housing market, there are signs
of a largely anticipated retreat with residential permits
falling about four per cent this year. RBC expects Quebec
housing starts to pull back a further 13 per cent in 2006.
Non-residential investment weakened last year and is down
another six per cent so far this year.
While regional differences exist across the country, Canada
is well positioned to absorb global economic shocks as a result
of geographically diversified investments, a strong consumer
sector and sound fiscal policy. Newfoundland and Labrador
will be the provincial growth leader this year with activity
in the oil and nickel sectors driving growth. After Newfoundland
and Labrador, the strongest economies will be west of the
Manitoba-Ontario border for 2006.
The RBC Economics Provincial Outlook assesses the
provinces according to economic growth, employment growth,
unemployment rates, personal income growth, retail sales,
housing starts and the Consumer Price Index.
According to the report (available online as of 8 a.m. E.D.T.,
at www.rbc.com/economics/market/pdf/provfcst.pdf), provincial
forecast details are as follows:
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For more information contact:
John Anania, RBC Economics, (416) 974-7231
Raymond Chouinard, RBC Media Relations,
(514) 874-6556
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