There are signs for hope in Calgary’s economic future. That’s according to the regional economic outlook for 2019-2024, released by the City of Calgary Tuesday.
The report points to four reasons for optimism in the next five years in and around Calgary. Growth in the energy sector, increased investment in areas like infrastructure and real estate, sustained job creation, and population growth via migration are all expected to help the economic region to improve through 2024.
“We’re seeing some nice shoots of growth,” Mayor Naheed Nenshi said Tuesday. “This economic recovery remains slower than I would like. It remains in too many ways a jobless recovery.”
City economists predict Western Canadian Select crude prices will rise to US$52 per barrel by 2024, up from US$38 per barrel in 2019, tightening the price differential with West Texas Intermediate prices. U.S. shale production is expected to help keep WTI prices down as well. The report expects low natural gas prices to persist through 2024, unless transportation issues are resolved.
Calgary’s gross domestic product (GDP) growth is expected to outpace provincial and federal GDP growth at 1.9 per cent. But that growth could be slowed by sluggish international growth and escalating trade tensions.
Alberta’s new UCP government presents the biggest variable for the region and the province’s growth.
“The new government’s energy strategy is a key risk element for the spring outlook with either upside or downside implications,” the report read.
The report said the elimination of the provincial carbon tax and introduction of the federal carbon tax backstop “would alter the distribution of economic activity and GDP.”
Residential building investment is expected to exceed non-residential through 2024, with construction estimated to average at $4.8 billion per year — between $2.5- and $2.6-billion in residential construction.
However, increases in the Bank of Canada’s benchmark interest rate could dampen housing starts in the city.
Calgary’s economic region is expected to take in more than half of Alberta investments in commercial property, retail property, investment property and tourism/recreational investments, and are expected to generate $8.9 billion in investment.
Migration from international locations is expected to be the main source of new additions to Calgary and area’s workforce, projected to number 172,800. That number represents an increase of the post-oil price shock era between 2015-2018, but not as many as pre-oil shock years of 2011-2014.
Baby boomers exiting the workforce are expected to help spur job growth in the city. And short-term skills shortages, due to a concentration of job opportunities in the service industry, are displacing jobs in the goods-producing sector.
Middle-aged people between the ages of 35 and 44 are expected to be the group to most add to Calgary’s population, a good sign for the region.
“Whenever the share of the population that is working and saving increases, there is a boost to economic prosperity,” the report said.
The city’s population is expected to increase to 1.399 million people by 2023, with migration to account for 61 per cent of the population increase.
Not only is the population expected to increase, but so too is employment. The regional economy is expected to add 108,500 jobs through to 2023, with unemployment projected to fall to 5.9 per cent in 2024.
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“Even under our most recent economic forecasts, we’re sort of getting to the Canadian average but still above it by 2023,” Nenshi said.
“I’m hopeful we can work with the new provincial government to really focus hard on attracting investment and job creation so that we can start pulling that number down and turning the curve and getting unemployment lower faster.”
The economic outlook does not expect the cost of living in Calgary to rise quickly. Increases should remain below two per cent.
However, the report estimates the operating costs for Calgary’s municipal government will increase by more than two per cent because of continued population growth, increases in prices of raw material and price increases in major commodities sold by manufacturers in Canada.
The city’s tenuous recovery after the oil price shock and it’s accompanying refrain is wearing thin for Calgary’s mayor.
“In 2017. I was saying we’ve got to nurture this fragile economic recovery,” Nenshi said. “And here I am in 2019 saying exactly the same thing could be.”