“Private and public construction activity will remain robust, and oil production will continue to increase as new oil sands projects start up over the next few years. Strong employment growth and income support will continue to bolster household spending in the province,” he said.

However, he added Alberta faces a critical need to upgrade the infrastructure surrounding the oil sands.

The report predicts that strong resource-based activity in the West and commodity prices will continue to underpin solid consumer and investment spending in 2008.

Nationally, Scotiabank said a combination of factors -- heightened foreign competition, a soaring loonie and a weakening US economy -- are restraining Canada’s overall economic performance, with the manufacturing sector bearing the brunt of the slowdown.

National output growth is expected to decelerate from an average of 2.6 per cent in 2007 to 1.9 per cent in 2008.

At the same time, non-residential construction and ongoing strength in service industries are providing enough forward momentum across the provinces to offset these headwinds. Construction activity, in particular, is receiving solid support from both private and public sectors, mainly for spending on infrastructure, said Mr Hamilton.

Federal, provincial and municipal governments have announced significant multi-year infrastructure investments. Faced not only with the need to upgrade roads, bridges and water treatment systems, Canada is also challenged by a growing economy and population base.

“Although most provinces are expected to witness some softening in growth in 2008, there will continue to be significant regional disparities between the Western, Central and Atlantic provinces,” said Mr Hamilton.

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