GDP growth of 3.1 per cent expected this year, says RBC Economics

TORONTO - A new forecast from RBC Economics says Canada's economy is poised for real GDP growth of 3.1 per cent this year and 3.9 per cent in 2011.

It says a peak in stimulus investment, improved credit markets and a recovery in consumer spending are fuelling the increase. Chief economist Craig Wright says a recovery is "solidly taking root in Canada" also due to low interest rates and improved credit markets.

He says strength in the housing market and investment by the private sector should provoke additional economic growth.

RBC adds consumer spending is expected to expand next year by 2.8 per cent and business investment by more than seven per cent.

On the jobs front, the bank says stability in the auto sector and rising commodity prices should spur a gradual improvement, with unemployment rates expected to average 8.4 per cent in 2010 before falling to 7.7 per cent in 2011.

Among the provinces, RBC expects a 4.1 GDP growth rate in Newfoundland and Labrador, 3.6 per cent in Saskatchewan, 3.4 per cent in B.C. and 3.3 per cent in Ontario.

Alberta's growth rate is expected to be just 2.5 per cent this year, but grow by 4.4 per cent in 2011.