TD Bank says Alberta’s battered economy is headed in the right direction, but warns there are still a number of hurdles that could hinder recovery.
A report released Thursday by deputy chief economist Derek Burleton is predicting economic growth between two and two-and-a-half per cent for Alberta in the next year which follows an increase of nearly 4.9 per cent in 2017.
“It was a nice bounce back last year, but growth is settling down this year and we’re of the mind that you’re going to get a continued moderate growth run over the next couple of years as the economy kinds of settles down,” Burleton said in an interview.
“I don’t think many were anticipating a heroic recovery despite the fact that the recession was quite deep.
“Oil production should grow despite some of the challenges in terms of pipelines. That’ll get us two per cent which is not heroic.”
Burleton said Alberta’s economy is within a year of returning “home” — a term used to characterize full recovery from a recession. However, it could be another two years before the job market fully recovers.
“Employment is back to where it was pre-recession, but a lot of the jobs are self-employment, more of a freelance type,” he said.
“Employers are kind of slow and part of that does reflect the lacklustre investment outlook over the next couple of years.”
The report also notes that government hiring, primarily in the health and education sectors, rose by nearly 10 per cent. Private sector jobs fell by five per cent during the recession.
Burleton said the lack of investment in Alberta, particularly in the oil and gas sector, remains a concern.
“I think that’s the Achilles heel for recovery so far. It is basically the missing element,” he said.
“Investment is not going to be catching fire soon. We’re not anticipating a lot of growth over the next few years and clearly there are some hurdles there.”
Burleton said Alberta could reassert itself as a leader in growth, but only if it deals with inadequate pipeline capacity, regulatory hurdles, and eliminating the government’s budget deficit.
“We still are of the mind that the economy will reassert itself,” he said. “It may be a bit at odds given the timing of this report just after the Trans Mountain decision and some of the concerns around the oil and gas sector.”
Late last month the Federal Court of Appeal quashed cabinet approval of the Trans Mountain expansion project.
The forecast says there is reason for optimism, including the resiliency of global oil demand and limited supply outside of Alberta, and decreasing production costs.