A leading Alberta economist points to the province’s agriculture and tourism sectors as bright spots for the bottom line this summer, but warns there could be trouble ahead.
Alberta sits in the midst of global uncertainty with no NAFTA deal yet, a raft of new international tariffs and increasing talk of trade wars.
“A lot hangs in the balance for Canada and for Alberta,” Hirsch says. “We are very trade-dependent regions and economies.
“And we just don’t know where this is all going to go.”
“What’s holding back the energy sector in 2018, and going into 2019, is the sector’s going to want to see even more certainty around pipeline capacity.”
Hirsch cites positive movement on the Trans Mountain pipeline project.
But if additional certainty is not introduced?
“We’re not going to see a lot of enthusiasm for new investments in the energy sector. For that to happen, we have to see some more progress on pipelines. It’s moving the right direction for sure, but we’re not out of the woods yet.”
And now for some good news
So far this year, Alberta farmers are falling on the good news side of the coin.
“Agriculture and agri-foods is actually one of the stronger sectors of Alberta’s economy in 2018,” Hirsch notes.
“If you’re a farmer and you’ve got to finance some new equipment rentals or equipment purchases, the increase in interest rates is going to add a crimp on that, but agriculture and agri-foods is one of the bright lights at the moment.”
Tourism is also providing an economic boost.
“With that softer Canadian dollar, more Albertans [are] staying closer to home this year,” Hirsch says.
“That’s combined with more Canadian, American and international visitors flooding in,” he said. “I think 2018 is shaping up to be probably a third record-setting year for tourism. So that’s good news.”
Looking into the future
The Bank of Canada recently edged up interest rates and while Hirsch says it’s impossible to say for certain if the rate could go up even further, his guess is yes, it will.
However, if the NAFTA situation worsens, Hirsch says the Bank of Canada may shift that rate back down again.