A new report suggests Alberta has cleared the recession but says it will likely be a few more years before a stronger and more resilient economy fully emerges.
ATB Financial released its 2018 Alberta Economic Outlook on Thursday, offering some insight into what the province may see in the coming months.
According to ATB, the five main findings of the report are as follows:
- Alberta has emerged from two years of recession with real GDP growth of around three per cent.
- Retail and housing sector performance is higher.
- Oil prices have dipped, and are expected to average below US$50 in 2017.
- Trade talks with the U.S. pose a risk to the economy.
- Tourism, agriculture, and agri-food will continue to lead growth but the oil sector remains the key driver in the province.
- Net out-migration to other provinces still likely to taper off later this year.
“Alberta’s economy is recovering, but it is not returning to what it looked like in 2014,” ATB Financial chief economist Todd Hirsch said in a news release. “Instead, the economy is evolving into one that is more diversified, and more typical of other Canadian provinces.”
“It is a slow process and it may be a few more years before we see a full economic recovery.”
“The energy sector continues to be challenged by oil prices hovering below US$50 per barrel,” Hirsch added. “At those levels, Alberta’s energy sector struggles. Drilling activity and hiring has picked up modestly, but growth in the sector remains tenuous and not likely to snap back to pre-recession levels anytime soon.”
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ATB is forecasting real GDP growth of 3.2 per cent this year, followed by a more modest expansion of 2.1 per cent in 2018.
Modest job creation seen throughout Alberta
Speaking on Global Calgary on Thursday, Hirsch said the labour market is adding jobs — some 35,000 over the last 12 months (+1.5 per cent).
“We’re seeing modest job creation even over the last 12 months — in fact, even in the energy sector we’re starting to see jobs coming back — the problem is that they’re lower paying,” Hirsch said. “We expect that to continue into 2018 — rest of 2017 and into 2018.”
Alberta’s retail sector continues to thrive
Hirsch points to some sectors which the report suggests are thriving, including agriculture, food processing, tourism, retail and manufacturing.
“There are some sectors that continue to do really well — surprisingly well, in fact — the retail sector and housing construction. I think that shows that there is still some confidence in Alberta,” Hirsh said. “Not like last year, a year ago right around this time. July and August 2016 was kind of the lowest point.
“Consumers are feeling better, and that’s being reflected in stronger retail numbers and some of those housing starts are holding up.”
Agri-food sector will see continued growth
“Where there’s some real growth is on the agri-food side,” Hirsh said. “In fact, food processing has now overtaken refined petroleum in Alberta in terms of value.”
Tourism also looking strong but might dip slightly in 2018
Hirsch adds they do expect to see continued growth in tourism, depending on the stability of the Canadian dollar.
“It’s stronger now than it was at the beginning of 2017. I’m not expecting the Canadian dollar to go back to par anytime soon — so as a result, I think tourism will have another good year in 2018. It might be a little bit down from 2017.”
“We’re seeing a lot of U.S. visits, we’re seeing a lot of visitors from China and other places in Asia.”
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