RBC cuts Canadian growth forecast after energy price plunge

A Royal Bank of Canada sign is pictured in downtown Toronto on Dec. 2, 2011. (Nathan Denette / THE CANADIAN PRESS)

TORONTO - RBC Economics has downgraded its latest forecast for the Canadian economy in 2015 after a sharp drop in energy prices.

The bank projects Canada's real GDP to grow by 2.4 per cent this year -- a reduction of 0.3 percentage points from its forecast issued last December.

RBC says while the drop in energy prices is a negative for the oil and gas sector, much of the weakening will be offset by stronger consumer spending and exports.

The bank predicts exports will provide a lifeline to the economy this year after a strong performance in 2014 when volume increased by 5.4 per cent.

RBC also predicts lower gas prices will fuel more consumer spending.

Provincially, RBC says Alberta's forecast is significantly lower, as is the outlook for Newfoundland and Labrador and Saskatchewan to a lesser extent. It says brighter prospects were expected in Ontario, B.C., Quebec and most other provinces.