A new report by the Conference Board of Canada (CBC) suggests both Calgary and Edmonton will not match the economic growth of 2017 in 2018, but total gains from the two years should bring the GDP back to where it was before the recession.
The report, titled Metropolitan Outlook Winter 2018 suggests growth will remain in the mid-two per cent range over the next five years for both cities.
In a news release Tuesday, the board said higher oil prices created a rebound in Calgary’s economy in 2017, while real GDP growth grew by 6.9 per cent. But “the city did not fully recoup the losses experienced after the oil price collapse in 2014. That task should be accomplished this year, however, as Calgary’s economy is expected to expand by a further 2.5 per cent.”
The report shows Calgary’s construction sector is forecast to expand by close to two per cent in both 2018 and 2019, however vacancy rates in downtown Calgary are expected to keep the downtown office market subdued.
The residential housing market in Calgary is facing some hurdles with unsold new houses, rising interest rates and a more rigorous federal mortgage stress test.
The report also said retail spending was up in 2017 but expected to see only modest gains for 2018.
After unemployment in Calgary hit a 22-year high of 9.4 per cent in 2016, the report says it dropped to 8.7 per cent last year and should settle around 8.2 per cent in 2018.
According to the board, Edmonton’s economy saw a boost in 2017 thanks to higher oil prices and stronger investment and drilling plans in the oilsands, however the real GDP growth is expected to level off in 2018.
Growth in the energy investment sector in 2017 helped construction output growth reach six per cent in 2017, but is forecast to grow by about 1.8 per cent in 2018. The report cites the reason as “a significant increase in office inventory has caused office vacancy rates to surge, dissuading developers from breaking ground on new projects.”
The board is expecting residential housing starts to go down for the second time in three years.
When it comes to employment, Edmonton had a flat reading in 2016, with growth of half a per cent in 2017 and a job growth forecast of one per cent for 2018.
Outside Alberta, Vancouver and Abbotsford-Mission are forecast to be the fastest-growing metropolitan area (CMA) in Canada this year, with real GDP forecast expected to grow by 2.7 and 2.5 per cent, respectively.
For a look at the full report click here.