Saskatchewan will lead the country in economic growth this year, Canada's largest bank predicts.

RBC Economics upgraded its growth forecast for the province to 4.3 per cent from 3.8 per cent on Monday.

The brighter outlook was largely based on stronger-than-expected crop production and increased demand for potash.

The latest projections by Statistics Canada show a 20 per cent increase in expected crop yields in Saskatchewan. RBC says stronger grain prices have also helped boost the province's agricultural sector.

Saskatchewan's potash production is expected to rise 20 per cent in 2011. However, the bank notes that number has plunged from the post-recession surge of more than 100 per cent last year.

Retail sales are predicted to more than double to 6.8 per cent, while housing starts are expected to rise 10 per cent to 6,500.

RBC predicts Saskatchewan's unemployment rate will edge down 0.2 per cent to five per cent. Meanwhile, the province's consumer price index is expected to rise to 2.5 per cent from 1.3 per cent.

The bank has downgraded its growth forecast for the Canadian economy to 2.4 per cent from its previous outlook of 3.2 per cent in June.