Toronto has Canada’s most dynamic economy, but it also faces some of the biggest risks in the coming year as the housing market slows down and government stimulus projects wrap up, says a new report from CIBC.

The bank’s Metropolitan Activity Index showed Calgary with the second-most dynamic economy in the country, followed by Regina.

(STORY CONTINUES BELOW SLIDESHOW)

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  • 10: Saguenay, QC - 12.2

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 9: Halifax, NS - 13.8

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 8: Vancouver, BC - 14.0

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 7: Ottawa, ON - 16.8

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 6: Edmonton, AB - 17.8

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 5: Saskatoon, SK - 18.2

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 4: Winnipeg, MB - 18.4

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 3: Regina, SK - 18.4

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 2: Calgary, AB - 19.5

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

  • 1: Toronto, ON - 20.6

    Figures represent index reading and not rate of economic growth. Source: <a href="http://research.cibcwm.com/res/Eco/ArEcoMEA.html">CIBC World Markets</a>

But while the report has only positive things to say about the economies of those two Prairie cities, Toronto will face “a major challenge to the city’s ability to maintain its current economic momentum,” CIBC deputy chief economist Benjamin Tal wrote.

“A softening housing market, the end of many federal and provincial governments’ infrastructure stimulus projects, a projected slower growth trajectory in the manufacturing sector and softer retail trade activity will work to slow overall economic momentum in the city in 2013,” he added.

The Greater Toronto Area accounts for about a fifth of Canada’s economic activity, with the city itself accounting for 11 per cent of Canada’s GDP. A slowdown in Toronto would inevitably have a negative effect on the rest of the country.

CIBC’s index ranks major Canadian metropolitan areas on nine criteria, including population and job growth, personal and business bankruptcy rates, and a number of housing indicators.

While Toronto didn’t come out on top in any of those criteria, it ranked high enough to be in first place overall, the report said.

But the city has seen a noticeable slowdown in its real estate sector, which accounts for about 14 per cent of its economy. CIBC data shows total housing sales declining by more than 10 per cent, year on year, in the third quarter of 2012.

Housing starts, by comparison, continued to grow, stoking fears among some observers of overbuilding in the city’s condo market.