A recently released report by Scotiabank says that Alberta will experience a sharp economic rebound during 2010 and will  lead all of the Canadian provinces in terms of GDP growth at 4.1%.

In general, all provinces have rebounded strongly, and the report forecasts Canadian output growth to average 3.6% this year, the strongest advance in a decade. For 2011, Scotiabank is forecasting that Alberta’s economic growth will be 3.4 per cent while Canada as a whole will average 2.7 per cent.

A strong pickup in investment will fuel growth in the energy and manufacturing sectors,

“Investment has perked up in the oil sands, as easing costs and higher oil prices revived investment intentions in late 2009, with $2.2 billion in outlays scheduled for 2010 alone. Renewed activity in the industry will lead to significant benefits flowing through the economy, with manufacturing and services all heavily tied to conditions in the energy sector. While the bulk of investment will stem from oil sand development and tight oil plays, recent revisions to the province’s royalty framework are a major positive for the natural gas industry.”

The Canadian Association of Drilling Contractors forecasts a significant increase in drilling activity in the third quarter of this year.

Retail sales have also shown strength so far this year, after declines during both 2008 and 2009. With the bulk of job growth still lying further ahead, additional gains are expected. Alberta residents remain the highest per capita spenders in Canada.

The report also points out how the province has also made efforts to diversify its economy with the development of its health sciences industry. Notably, the Alberta Innovates initiative provides funding for a wide variety of domains, including health, energy and the environment.

Alberta’s economy is one of the strongest in Canada, supported by the petroleum industry and, to a lesser extent, agriculture and technology. According to the Fraser Institute, Alberta has very high levels of economic freedom. On its Canadian Provincial Investment Climate Report, it shows how Alberta continues to set the pace and leads the country in terms of creating and maintaining a positive investment climate. It also claims that it is “by far the most free economy in Canada, and is rated as the 2nd most free economy of U.S. states and Canadian provinces.”