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.
TD expects it to contract 2.7 percent, while Scotia sees a 2.9 percent decline. For Quebec, TD expects the economy to shrink 2.3 percent, and Scotia expects a 2.5 percent contraction.
A plunge in commodity prices and shelved oil sands projects will likely hurt Alberta’s economy after years of torrid petroleum-fueled expansion. Scotia expects the Alberta economy to retreat by 2.3 percent, while TD sees a decline of 2.6 percent.
Both banks also forecast that national housing starts will slow and that the Canadian unemployment rate will close in on 9 percent.
All provinces should see their economies recover slightly in 2010, the banks said, as monetary and fiscal stimulus measures are implemented to help reverse the slowdown.
Nationally, Scotia sees growth at 1.6 percent in 2010, while TD forecasts economic expansion at 1.3 percent.
“There are considerable headwinds confronting households and businesses -- rising joblessness, declining wealth and profitability, and industrial overcapacity, for example -- that will restrain the pace of the economy’s renewed forward momentum,” said Adrienne Warren, senior economist at Scotia Economics.
British Columbia is pegged to outpace national growth in 2010 with a lift from the Winter Olympics to be held in Vancouver and Whistler, British Columbia. TD expects 2.4 percent expansion in British Columbia next year, while Scotiabank sees 2.1 percent growth.
Reporting by Ka Yan Ng; Editing by Peter Galloway