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Forecast that Alberta, B.C. will lead country in economic growth in 2020 ‘a bit bullish’: experts

WATCH: (May 16) The Director of Insight at the Alberta Treasury Branch joins Global News Morning Calgary to discuss the latest economic outlook for Alberta.

In its quarterly economic forecast released Monday, the Conference Board of Canada paints a positive picture for Alberta.

Its provincial outlook predicts Alberta’s economy will rebound by 2.4 per cent next year and 3.1 per cent in 2021.

The conference board credited the bump to the Trans Mountain pipeline expansion officially seeing construction underway, money coming in to build LNG Canada and a forecast turnaround in energy investment.

READ MORE: Calgary-based Encana moving headquarters from Calgary to the U.S.

The board’s report estimates the TMX project will “change the landscape of the energy sector over the next five years, temporarily creating a significant net-positive take-away capacity for oil producers and incentivizing expansions and new projects.”

Edmonton economic outlook impacted by oil production cut
Edmonton economic outlook impacted by oil production cut

“After increasing by 1.6 per cent this year, growth in the Canadian economy is expected to reach 1.8 per cent in 2020 as energy investment turns around and consumer spending picks up,” the report explained.

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“British Columbia and Alberta will see the biggest boost from energy investment and are expected to lead the country in economic growth next year.”

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The report said Newfoundland and Labrador will have the strongest-growing economy this year. The board credits “surging mineral fuels production” and says the region is set to post the strongest GDP growth of any province in 2019, with an estimated 4.5 per cent.

READ MORE: Pipeline constraints to slow Alberta’s economy to single-digit growth in 2019: ATB

“After a tough year in 2019, a modest rebound is in sight for Alberta next year,” it added.

“Alberta’s economy has struggled this year as the lack of take-away capacity is severely limiting energy investment… But with some positive news lately on the pipeline front, as well as other measures to move more oil to market, investment is expected to recover next year.”

ATB Financial releases its first Alberta Economic Outlook of 2018
ATB Financial releases its first Alberta Economic Outlook of 2018

The board said Alberta’s rate of growth won’t overtake B.C.’s but the two western provinces will be the only two in Canada likely to have real economic growth above two per cent in 2020.

READ MORE: Canadian oil and gas drilling activity expected to fall by 10 per cent in 2020

However, other forecasts for the province’s next few years haven’t been as rosy.

In May, the same board predicted Alberta could be sinking back into a recession for the year.

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Conference Board predicts another Alberta recession
Conference Board predicts another Alberta recession

Edmonton’s chief economist said the board’s recent projections for Alberta are “on the high side.”

“I currently expect a very modest improvement in provincial growth from about 0.7 per cent this year to around 1.5 per cent in 2020 and then moving up to slightly above two per cent in 2021,” John Rose told Global News.

“I do agree that the lack of additional pipeline capacity is a key issue with respect Alberta’s future growth.

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“However the Trans Mountain itself is a temporary fix in that Alberta’s capacity to produce oil with rapidly outstrip the capacity of that facility. So for sustained growth, Alberta needs Keystone XL and the Line 3 expansion to also move forward.”

READ MORE: City of Edmonton economist predicts pipeline-related dip in local economic forecast

Concordia political scientist Elizabeth Smyth agreed, saying the report seems “a bit bullish.”

“There is little said about projected oil prices and the start on TMX seems to be the key to expanding investment in the oil sector,” she said.

“But I would assume that oil prices will play a role as well in influencing investment.

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“Their projection on unemployment is less bullish, as it seems it will stop rising and then flatten out with not a lot of decline.”

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The Conference Board of Canada describes itself as an independent, evidence-based applied research organization.

It explained forecasts and research often “involve numerous assumptions and data sources, and are subject to inherent risks and uncertainties.”

Trans Mountain pipeline construction back on course
Trans Mountain pipeline construction back on course