Canada will see "relatively modest" gross domestic product growth of 2.2 percent in 2007 due to the slowdown of the overall world economic growth as well as the weakening economy in its major trading partner the United States, the National Bank predicted Wednesday in its quarterly outlook.

Rapid industrialization in Asia, where powerhouses China and India continue to gain steam, will ensure the continued expansion of the world economy, "albeit at a slower pace," the bank said in a release.

An American slowdown already in progress "will spread in 2007 as American households become more focused on savings in the wake of the real estate sector's nosedive," the bank said.

"Although its fundamentals are among the most solid of all G7 nations, Canada will not be protected from the headwinds blowing south of the border in 2007, with a relatively modest 2.2 percent growth in GDP predicted."

Chief economist Clement Gignac said the bank believes a regional divide will continue between the hard-hit manufacturing centers of Central and Eastern Canada and the burgeoning Western provinces in 2007.

As natural resources continue to drive the Western economies, Ontario and Quebec will likely see economic growth under two percent in the coming year.

The bank said it believes there are interest rate cuts on the horizon, with the "Bank of Canada's key rate likely to total close to 100 basis points," which is good news for Canadian households.