OTTAWA — The “overexuberance” in consumer spending that lifted Canada out of the recession at the end of 2009 and early in 2010 is well behind us, according to a report released Tuesday that suggests that most cities will see growth slow this year.
Only nine of the 27 census metropolitan areas studied for the winter 2011 edition of the Conference Board of Canada’s Metropolitan Outlook will grow more in 2011 than in 2010, the board says.
“Household spending was the predominant factor in lifting Canada’s economy out of recession, but the overexuberance that ended 2009 and started 2010 is now falling,” the report’s authors write, noting that the housing market is set to decline as mortgage rates rise, and housing starts will begin start to fall off as developers react to the slowing market, which will in turn have a ripple effect through various sectors.
Continuing uncertainty over the strength of the economic recovery in the United States will also weigh on Canada’s economic progress, as will the winding down of stimulus packages. The end result will be “stable or lower growth in a majority of cities,” says Mario Lefebvre, co-author of the report and director, centre for municipal studies.
A variety of factors will be at play for the cities whose 2011 economies are expected to outpace their 2010 performances: Windsor, Ont., Calgary, Oshawa, Ont., Regina, Saskatoon, London, Ont., Sherbrooke, Que., Winnipeg and Thunder Bay, Ont.
In Windsor, which is forecast to have the fastest-growing economy in the country this year, a resurgence in construction activity with the construction of the Windsor-Essex Parkway is expected to be the main driver. Its 2011 GDP is expected to grow 3.9% — more than 2010’s 3.5%, but still below 2007 levels “and Windsor’s economy remains fragile,” the study says.
“Calgary’s economy will regain its place as one of the fastest-growing CMAs in Canada over the next two years” as the energy sector recovers, the authors say.
The manufacturing sector — specifically auto production — will be responsible for growth in Oshawa, while the resource boom will be the driver in Regina and construction will support growth in Saskatoon.
London’s services sector, Sherbrooke’s manufacturing and services sectors, and Winnipeg’s manufacturing sector will lead the growth in those cities, while construction, along with the utilities sector, will drive growth in Thunder Bay, according to the report.