Recession to unfold in Alberta, N.L., while B.C. powers ahead, economist predicts

Expect a recession this year in Alberta and Newfoundland and Labrador, while British Columbia will have the highest growth, according to a new outlook from the Conference Board of Canada.

There are "winds of change" blowing through the Canadian economy, it said, that will shift economic growth to Central Canada, Manitoba and B.C.

"The outlook is more upbeat in Quebec and Ontario than it has been in years," the report says.

"While flagship sectors, such as auto assembly and aerospace, face stiff external competition, exports in general will benefit greatly from the weaker loonie and better U.S. performance."

A combination of strong exports, especially of forestry and building products, and a hot housing market will have B.C. leading growth this year, with its GDP expanding by 3.1 per cent.

"The economy actually did quite well in 2014 and it's going to continue to build on that momentum," said Marie-Christine Bernard, associate director of provincial forecast service with the Conference Board of Canada.

"Manufacturing is doing quite well in B.C., the forestry sector as well with the rebound in housing starts in the U.S., but British Columbia also the whole service sector is doing well," she said in an interview with CBC News. 

Tough times in Alberta, N.L.

Meanwhile, the oil-producing provinces are looking at tougher times, with Alberta's economy contracting by 0.7 per cent this year and N.L. expecting a 0.1 per cent contraction, caused mainly by stalled investment, the provincial outlook says.

Lack of new business investment, especially in the oil industry, will be a drag on economies as oil prices remain in the $60 range.

While other economists have not predicted a recession for Alberta, Bernard said as data comes in, a downturn looks increasingly likely.

"We don't think that province will be able to avoid a recession. Just the decline in capital investment that has been announced, we think that the Alberta economy will contract by 0.7 per cent in 2015," she said.

The decline in drilling has led to job losses and that has Albertans pulling back on their spending, Bernard added.

Bernard points out that Canada's economy had a rough start this year, with the lack of oil and mining investment combining with weakening consumer demand and restraints on government spending to keep growth low.

She is projecting growth of 1.9 per cent for the whole Canadian economy, with the pace picking up in the last part of the year as the U.S. economy strengthens. Trade is expected to boost the economy in the later part of the year.

But the jobs picture is still lacklustre, with the economy to add just 172,000 jobs this year. That follows on the poor performance in 2014, which saw the weakest increase since 2009.

"A lot of the jobs created in the past few years have been in the service sector. I think this trend will continue over the near term," Bernard said.

"We see a small turnaround in the manufacturing sector, but the job numbers aren't going to be like they were at the beginning of the 2000s."