Canada could be looking at "above-potential" growth this year and next, according to the Royal Bank's latest economic outlook.
In the RBC Economic Outlook released early Tuesday, the bank predicts Canada will build on the real gross domestic product's 1.8 per cent gain in 2011 to rise 2.6 per cent in 2012 and the same again in 2013.
RBC chief economist Craig Wright says a number of factors are boosting the outlook, including low interest rates, a strong loonie and high commodity prices.
And while the result is promising nationally, the outlook is less rosy when broken down by region.
The theme, Wright told CTV's Canada AM, is one of "the West and the rest."
Western provinces, along with Newfoundland and Labrador are above the national average in terms of growth prospects, he said.
Ontario is pegged at the national average with Quebec and the rest of the Atlantic provinces positioned for below-average gains.
"So it is continuing to be unbalanced growth."
Nevertheless, Wright predicts growth across Canada will be spread among consumers, investors and businesses.
"We're staring to see confidence improve," across all those sectors of the economy, he said, which will translate into more investment, more hiring and more consumer spending.
In the U.S., where consumers account for 70 per cent of the economy, Wright said rising employment numbers add to the bank's positive outlook.
"We're starting to see the employment look like it's sustainable gains and with that the unemployment rate's moving lower," he said. And when Americans are earning a paycheque, they can spend it.
And as the U.S. economy grows, Canada stands to benefit "given that exports account for 30 per cent of Canada's GDP and about three-quarters of those exports go to the US."
Other highlights from the RBC outlook include:
The pace of growth in consumer spending will remain around the same 2.2 per cent posted in 2011, with durable goods accounting for a quarter of the increase.
Demand for Canadian autos, machinery and lumber will help boost exports back to their pre-recession peak in 2013.
The bank expects the housing market to hold steady on the back of overnight lending rates holding steady this year, before rising to 2 per cent by the end of 2013.
The ongoing "commodities boom" sees Saskatchewan leading all provinces in real GDP forecast for 2012 with a "solid rate" of 4.6 per cent. Alberta (3.9 per cent) and Manitoba (3.4 per cent) are close behind.
Central and Atlantic provinces not only miss out on the benefits of strong commodity markets, they will be weighed down by fiscal policy. "While necessary to restore the health of provincial finances, such restraint will weigh on these provinces' growth more heavily."
