In its latest forecast released Wednesday, Scotiabank expects Alberta's economy to expand 3.5 per cent, the most growth among the provinces. The province is expected to post three per cent growth this year.

"Resource-related activity is ramping up alongside strong emerging-market demand for key industrial products, which along with a weaker U.S. dollar, is boosting commodity prices," said Scotia Economics economist Alex Koustas in a release.

The report also noted that Alberta's job market has been slow to catch up to national gains, but expects "substantial" improvements in 2011.

The housing market posted strong rebound in starts, with potential for steady gains as in-migration return to growth, it noted.

Housing starts have recovered sharply this year after steep declines in 2008-09. "Net flow turned positive in the first half of 2010, a trend that should continue as job prospects improve, supporting the outlook for retail and housing activity," Scotiabank said.

The pace of economic growth is more cautious than other recent forecasts, which also show the province to return to the head of the pack next year. RBC Economics pegs Alberta's economy to grow 4.3 per cent next year.

Rising prices for commodities such as oil and metals will play a role in bolstering certain parts of the country, the report said.