“It is not good news,” is how John Rose wrapped up his email to Global News in response to to Thursday’s Federal Court decision that overturned the federal government’s approval of the Trans Mountain pipeline expansion project.
The City of Edmonton chief economist will be delivering his updated forecast in late September, however, in an interview with Global News, he confirmed he’ll be dropping the city’s economic outlook by a couple of tenths of a percentage point for both the rest of this year and next.
Rose’s current GDP forecast is for 2.5 per cent growth this year, and three per cent in 2019. He said you can expect that to now come in in the range of 2.3 per cent and 2.8 per cent.
“Delaying the project will depress, to some extent, engineering and logistics and project management activities as well as manufacturing, just simply because the project’s been delayed,” he said.
Beyond that, it gets worse.
“I don’t think the immediate direct effects are going to be all that significant,” Rose said.
“My concern is longer term. When we get out to 2022 [and] 2023 and we simply don’t have the export capacity to move any additional oil out, that constrains investment.”
That’s when Rachel Notley’s NDP government was counting on increased royalties to help get the books balanced and pay off debt.
Watch below: Some videos from Global News’ coverage of Thursday’s ruling by the Federal Court of Appeal.
With about 27 per cent of employment in the Edmonton region being based in health care, education and public administration, Rose predicts cuts to the size of government would hit Edmonton “very hard and very fast,” especially if a number of political pundits are correct and there is a change in government next spring.
Adding to Rose’s pessimism are comments he said he’s hearing from the energy industry.
“‘If we can’t get this stuff built, why am I investing my money here?'” is one refrain Rose said he has heard over and over. “‘We’ve had revisions to the U.S. corporate tax system, why am I engaging here where the regulatory processes have become obscure and the goal posts keep moving.'”