Canada economy weak, Ontario hit hardest, banks say

Tue Mar 17, 2009 1:39pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - The rural western province of Saskatchewan will have the strongest economic performance in Canada this year and the industrialized central province of Ontario will be hardest hit by global recession and financial market turmoil, reports from two Canadian banks said on Tuesday.

Toronto-Dominion Bank and Bank of Nova Scotia both expect broad economic weakness across the country, pushing the overall economy to contract 2.4 percent in 2009, following meager growth of 0.5 percent in 2008.

GDP slid 3.4 percent in the final quarter of 2008, the biggest quarterly contraction since 1991.

"All regions of the country have faltered in lockstep since the fourth quarter of 2008," said Pascal Gauthier, economist at TD Bank. "This is the one reunion tour from the recession marching band we all would rather not attend."

Both banks said that Saskatchewan is the bright spot this year. TD expects the Prairie province, a hotbed for potash and uranium exploration and production, to grow 0.4 percent, extending its growth leadership from 2008.

Scotia forecast the Saskatchewan economy will not grow, but will not contract either.

The banks expect the steepest slowdowns to come in Ontario and Quebec, where manufacturing is a critical contributor to economic health.

TD and Scotia both expect the economy in Ontario, the country's most populous province, to contract for a second straight year.   Continued...

<p>A view of a branch of a TD Canada Trust bank in Toronto November 9, 2007. REUTERS/Mark Blinch</p>