RBC trims economic growth forecast

The Royal Bank has "slightly pared back" its economic forecast for Canada in 2010 and 2011 as growth is easing in the second half of the year.

The bank isprojecting Canadian GDP growth of 3.3 per cent for thisyear, down from the 3.6 per cent growth estimated in the second quarter, it said in a news release Friday.

Forecast growth in 2011 has also fallen by0.3 percentage points, to3.2 per cent from 3.5 per cent in the bank'sprojection last quarter.

"Concerns in the U.S. and nervousness about the health of the global economy are weighing on the outlook for the second half of the year," said Craig Wright, senior vice-president and chief economist.

The U.S. forecast is down by 0.4 percentage points in both years, to2.7 per cent in 2010 and three per cent in 2011.

The bank is predicting that the Canadian dollar will end 2010 at 93.45 centsUSand will risetoward parity by mid-2011. The dollar closed at96.74 US on Thursday.

Most of the workers who lost their jobs in the recession have found new work, and RBC expects the unemployment rate will fall to 7.3 per cent by the end of 2011, down fromeight per cent in the second quarter.

Among the provinces, the bank has forecast big gains in Saskatchewan(jumped to6.3 per cent from the former forecast of 3.8 per cent) and Alberta (up to 3.5 per cent from 3.1 per cent).

Changes in most provincial forecastswere small, butManitoba was cut by0.9 percentage pointstotwo per cent.