Economic turmoil to hit right across Canada: report

Thu Nov 13, 2008 3:50pm EST
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TORONTO (Reuters) - Global financial turmoil is expected to hit every one of Canada's province's and put Ontario -- the country's main manufacturing region -- on the brink of a recession this year and into 2009, the Conference Board of Canada said in a report on Thursday.

The research organization said a "phenomenal" series of events brought on by recent financial turmoil, sliding commodity prices and tighter credit conditions has dampened Canada's economic prospects.

Of all the 10 provinces, Ontario will likely bear the brunt of the fallout the Conference Board said, because of its heavy reliance on trade with the United States, which is itself being battered by an economic downturn.

"The slowdown in financial and consumer activity in the United States will take its toll on Ontario, which will produce economic growth of just 0.2 percent this year and 0.8 percent next year," Marie-Christine Bernard, the board's associate director of provincial forecasts, said in a statement.

"In 2009, Ontario will post its first trade deficit since the province began keeping records almost thirty years ago. Ontario consumers will also tighten their belts, weakening growth in the domestic economy," Bernard said.

The board said Ontario's economy is "reeling" from the U.S. slowdown. The automotive sector, which accounts for roughly a quarter of the province's exports, is expected to contract significantly for a second straight year in 2009 as U.S. vehicle sales stall, the board said.

Ultimately, the going will be tough across Central Canada until the U.S. economy recovers, though Quebec's economic prospects are "more encouraging" than Ontario's.

Real GDP for Quebec is expected to grow 0.9 percent in 2008 and 1.5 percent next year, helped by an optimistic outlook for the province's aerospace industry.

The Prairie provinces will remain on a strong footing next year as the resource-rich region largely avoids the economic turbulence, the board said.   Continued...