Another day, yet more preliminary assessments of the economic impact the Alberta flooding disaster has wrought.
Fresh estimates released Wednesday suggest Alberta has experienced an economic jolt that’s washed away as much as a billion and a half dollars worth of business activity.
“Although it remains too early to pinpoint the exact hit to economic activity in June, we estimate that the disruptions subtracted roughly $500 million–$1.5 billion,” a commentary from TD Economics said.
Counterparts at CIBC World Markets said the flood disaster could knock a full percentage point off GDP growth for the third quarter, which spans the summer months through September.
Still, economists at both banks say the economic benefits from the rebuilding phase to restore infrastructure and repair homes will generate its own momentum, helping to make up for the immediate economic loss the disaster has caused.
“With water levels now receding, the economy is expected to bounce back strongly beginning in July,” TD economists Jonathan Bendiner, Derek Burleton and Sonya Gulati said.
“Natural disasters tend to share the same pattern. … As the recovery begins – typically in short order – a large part of the losses to production, spending and labour hours are quickly recouped.
“And somewhat paradoxically, the significant rebuilding that follows often provides a net boost to economic growth.”
Read more: Alberta flood’s cost estimates mount as Calgary real estate forecast looms
Government spending to reconstruct roads, sewer systems and other public infrastructure combined with private demand to repair flood damaged property could lead to a “surge” in construction hiring, TD says, which may need to draw from workers from other provinces.
“There likely will be a positive GDP impact as the region and province gets out from the immediate aftermath,” said Emanuella Enenajor, economist at CIBC World Markets.
“Rebuilding efforts in the quarters ahead could support activity, although the process will likely be drawn-out given the extent of the damage to homes, businesses, roads, and other infrastructure.”
One wildcard in the recovery process is what Calgary’s annual Stampede can do to revive tourism in the city. The event typically generates between $300 million and $400 million. Organizers have said the event will go on as planned.
TD said Alberta’s key oil and gas sector, which accounts for about a third of province’s economic growth, hasn’t been overly disrupted despite the flood waters knocking the head offices of some Canadian energy giants offline.
“While employees of oil and gas producers headquartered in Calgary have been affected, energy production in the province has suffered only minor setbacks during the crisis.”
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