OTTAWA - The East-West economic divide in Canada is widening, a new study of the country's largest cities has found.
The Conference Board's metropolitan outlook study, released Thursday, shows that the seven fastest growing cities in Canada are all in the West, led by Saskatoon and Calgary.
Meanwhile eastern economic powerhouses such as Toronto are operating well below their potential as the strong Canadian dollar squeezes exports to the United States and further cuts into the manufacturing sector based in Ontario and Quebec.
Restructuring of the North American auto industry has also hurt the Big Three carmakers operating in Ontario, with thousands of job cuts in the last two years.
Western economic growth has been strong for several years, notes Mario Lefebvre of the Conference Board, but "2007 is turning out to be a year in which the east-west disparity in economic growth is the greatest."
The western provinces have especially benefited from the growth in the oil and gas sector, as crude oil prices continue to rise and oilpatch companies spend billions of dollars to expand the oilsands deposits of northern Alberta, new oilfields in southern Saskatchewan and natural gas deposits in northeastern British Columbia.
In addition, companies involved in mining, agriculture and processing have also benefited from rising commodities prices and growing demand from Asia, especially China.
Producers of coal in B.C. and Alberta, uranium in northern Saskatchewan and other base metals across the West are cashing in on record prices and helping offset the loss of jobs in the battered forestry industry.
Shipments of everything from wheat and barley to coal, potash and chemicals are flowing through Vancouver and other ports along the West Coast to China, Japan and elsewhere.
In most Western cities, residential and commercial construction tied to the strong growth in resources has also helped boost local economies.
Thursday's outlook by the Conference Board examined the economies of 13 large metropolitan areas stretching from Halifax to Victoria, and found that the top seven were all in the West, while the trailing six were all in Central and Eastern Canada.
The outlook said Saskatoon will lead the country this year with a 4.7 per cent increase in Gross Domestic Product this year as the continuing influx of interprovincial migrants attracted by the strong economy boosts the city's housing sector.
Calgary, the corporate centre of the Canadian oilpatch, follows closely at 4.4 per cent, well off last year's blistering 7.7 per cent GDP growth, followed by Winnipeg (3.7 per cent), Edmonton (3.6 per cent), Regina (3.5 per cent), Vancouver (2.9 per cent), and Victoria (2.8 per cent).
On the other side of the scale, Toronto fares best among eastern cities with a forecast growth of 2.7 per cent, mainly because of its diversified economy of financial services, light manufacturing, retailing and government.
"The strong Canadian dollar and weak U.S. demand (for manufactured goods) has dampened Toronto's outlook," the report states. However, strong employment outside the manufacturing sector has kept the city's growth from falling further.
Of the other eastern cities, steel-dependent Hamilton is predicted to fare the worst with 1.3 per cent growth this year. In descending order of growth, the outlook said Quebec City's economy will expand by 2.6 per cent, Halifax by 2.5 per cent, Ottawa-Gatineau by 2.3 per cent and Montreal by 2.1 per cent.
