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.
Saskatchewan is poised to lead the country in GDP growth due to its diversified mix of natural resources and agricultural commodities. Growth is seen at 5.2 percent this year and 3.6 percent in 2009.
Manitoba is expected to be relatively unscathed by the economic turmoil and growth is forecast at 2.7 percent in 2008 and 2.4 percent next year.
Alberta, the center of Canada’s energy sector, has lost some steam, the report said, as has the Pacific Coast province of British Columbia. In 2008, both Alberta and British Columbia will grow 1.2 percent and will see economic growth next year of 2.6 percent and 1.8 percent, respectively.
The Atlantic region has been hit hard by the U.S. downturn with tiny Prince Edward Island seen showing only modest GDP growth of 0.7 percent this year 1.3 percent in 2009. New Brunswick will advance by 1 percent in 2008 and 0.8 percent next year, the report said.
Nova Scotia’s growth is expected to be 1.5 percent in 2008 and 1 percent in 2009 as output in mining and manufacturing decline, the board said.
Newfoundland and Labrador is forecast to grow by 1.5 percent this year, but its real GDP will contract 0.7 percent next year as oil production tumbles, the board said.
Earlier this month, the board said Canada would barely skirt a recession as slumping trade with the United States, softer prices for commodities such as oil and metals, and tighter credit markets dim its growth prospects in 2009.
Reporting by Jennifer Kwan; editing by Rob Wilson