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TORONTO: Canada's gross domestic product is projected to grow by 3.6 per cent this year, according to a new forecast from RBC Economics.

This follows real GDP growth of 6.1 per cent in the first quarter, which RBC says was the fastest pace in over a decade.

Chief economist Craig Wright says the economy is surging ahead on domestic demand and growth in consumer, housing and government spending.

RBC Economics says the economy should continue to show gradual improvement as businesses rebuild inventories following a sharp reduction during the recession.

Wright says looking ahead, ''positive signs in the job market indicate that the recovery will continue in the near term.''

The bank forecast pegs unemployment to average 8.0 per cent this year before falling to 7.3 per cent in 2011.

It says GDP is expected to rise 3.5 per cent in 2011 and core inflation rates to remain just below two per cent, as the Bank of Canada slowly reduces the amount of policy stimulus and raises interest rates.

Among provinces, growth in 2010 will be boosted by gains in Newfoundland and Labrador (4.1 per cent), Saskatchewan (3.8 per cent), B.C. (3.5 per cent) and Ontario (3.5 per cent). Growth in Alberta will rise 3.1 per cent this year but strengthen to 4.2 per cent in 2011, the second highest rate of growth behind Saskatchewan (at 4.4 per cent).