BMO Economics: Stimulus, U.S. Growth to Support Quebec Economy in 2014
- GDP growth of 1.1 per cent expected in 2013, 1.8 per cent in 2014 (Canadian GDP growth expected to be 1.6 per cent in 2013, 2.2 per cent in 2014) - Stimulus measures, such as tax credits, are helping to grow the economy - Construction industry rebounding after workers' strike during the summer
MONTREAL, QUEBEC--(Marketwired - Oct 30, 2013) - Quebec's economy is expected to grow at 1.1 per cent in 2013 and growth should increase to 1.8 per cent next year, according to the Provincial Monitor report released today by BMO Economics.
"A stronger U.S. economy, along with some recently announced stimulus measures taking root, should lead to the pick up in Quebec growth in 2014," said Robert Kavcic, Senior Economist, BMO Capital Markets.
While the Province continues to target balanced budgets for this and the next fiscal year, the government has turned to stimulus measures including discounted hydro rates for corporations, tax credits and renovation credits. "The total package is worth $2 billion over four years and should represent about 0.1 per cent of GDP," noted Mr. Kavcic. "If these measures go ahead, they would follow a few years of rising taxes and cooler public-sector capital spending."
On the construction side, the June strike reduced output and represented a drag on growth, although there has been a rebound in Q3 with workers back on the job.
Employment has fallen by 45,000 jobs, with manufacturing, education and health care showing steep declines and the jobless rate sitting at 7.9 per cent.
More broadly, the housing market has softened and cities such as Montreal have not sprung back from early-year lulls with the same vigour as markets elsewhere in the country.
"BMO commercial clients in Quebec are showing signs of cautious optimism while acknowledging the need to invest in their operations to increase productivity," said Mario Rigante, Vice-President, Commercial Banking, Greater Montreal at BMO Bank of Montreal. "Businesses are however, choosing to be very selective and cost conscious with their projects, investments and equipment purchases. There is certainly more attention being paid to the bottom line than we've seen in the past," added Mr. Rigante.
The full Provincial Monitor can be downloaded at www.bmocm.com/economics.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $549 billion as at July 31, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.
