Friday, December 16, 2011

western provinces economic growth forecast 2012

World Economic outlook - western provinces economic growth forecast 2012 : Western provinces will continue to lead economic growth in Canada next year. "The western provinces will lead the growth ladder," said Doug Porter, deputy chief economist with BMO Capital Markets. "They are in better fiscal shape and continue to see strong inflows of people."

Porter, BMO chief investment officer Paul Taylor and BMO global currency and public policy strategist Andrew Busch offered their thoughts on the economic outlook for 2012 in a conference call Thursday.

Porter said North America should be able to withstand the turmoil in Europe though growth will be sluggish. He forecasts Canada's economy will grow two per cent in 2012, the U.S. will grow by 2.25 per cent while European GDP will decline one per cent.

"The U.S. has quietly continued to improve," he said. "Weekly jobless claims was the best seen in three years and suggests the U.S. labour market is improving.

Busch said the U.S. should continue their positive momentum in the first half of 2012 while Europe and China will have slow growth. In the second half of 2012 the United States economy will slow while Europe and China pick up momentum.

"In the first half of the year there is going to be quite a bit of uncertainty surrounding the monetary polices of the ECB (European Central Bank), The People's Bank of China and possibly even the Federal Reserve," Busch said. "As we get into the second half of the year we will have more certainty and we will see the financial markets respond by selling the U.S. dollar, buying equities and selling bonds."

Porter said the Canadian dollar is likely to dip below 95 cents U.S. in the first half of 2012 before ending the year just shy of parity, adding he expects the Bank of Canada to keep its key lending rate at one per cent through 2012 and possibly into 2013.

Taylor said investment opportunities will be in the non-cyclical sectors like telecoms, utilities, health care and consumer staples. In the latter part 2012, "if recovery becomes more deeply rooted a rotation into the cyclical sectors, consumer discretionary technology material and energy probably make sense."

If Europe can take positive steps forward and the U.S. keeps creating jobs he predicts the S&P/TSX Compositie index could hit 13,000 by end of 2012. If there is failure in Europe the index could fall to 9,500.

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