TORONTO - Ongoing weakness in the energy sector has prompted RBC Economics to downgrade its latest forecast for the Canadian economy.

It says Canada's real GDP is projected to grow 1.2 per cent this year -- down from its June prediction of 1.8 per cent growth. RBC also predicts 2.2 per cent growth in 2016 -- 0.4 per cent below its earlier predictions.

However, RBC says while the economy contracted mildly in both the first and second quarters of 2015, the depth of the decline was marginal and the weakness was concentrated mostly in the energy sector.

RBC says it expects positive economic activity outside of the energy sector to offset momentum lost in the first half of the year.

Provincial economies continue to be divided between oil producers and oil consumers, with the fallout from plunging oil prices significantly lowering the outlook for economic activity in Newfoundland and Labrador, Alberta and Saskatchewan.

RBC says the prospects for Ontario, British Columbia, Quebec are brighter, as well as for most of the other oil-consuming provinces, although the expected liftoff in growth generally has been delayed.