A new report suggests it will take some time for Alberta’s economy to get back to where it was before the COVID-19 pandemic hit.
ATB Financial’s latest Alberta Economic Outlook, released on Thursday, shows the province’s real GDP will grow by approximately 3.3 per cent in 2021, but indicates it will still be a long road to recovery.
“It’s going to take probably a couple years before we’re back to where we were when the pandemic hit,” said Rob Roach, director of research for ATB Financial’s Economics and Research team, in an interview with Global News.
The ATB report finds that since the lockdown in spring 2020, Alberta’s economy has risen, but it will still be about seven per cent smaller in 2020 than it was last year.
It didn’t help that Alberta’s economy was already struggling when the pandemic hit.
“2019 was a recession year for the province,” Roach said. “Our GDP just edged down a little bit by about 0.6 per cent, but still, that was the wrong direction. 2020 was looking like it would be a better year until of course the pandemic came into play.”
ATB is forecasting it will likely take until 2023 for Alberta’s annual GDP to surpass where it was in 2019.
“Our assumption going forward is that there will be ongoing economic disruption from the pandemic,” Roach explained. “There’s still going to be public health measures. But we’re assuming we won’t see a full lockdown like we did in the spring. We’re also assuming that a vaccine will eventually come into play — but not right away. So if that happened a little sooner things might get better quicker.
“Overall, any way you cut it, it’s going to be a long haul before we’re back to where we want to be.”
When it comes to the province’s unemployment rate, which was among the highest in Canada this summer according to Statistics Canada’s Labour Force Surveys, the report suggests it won’t be much better in 2021.
“There’s just not enough job growth to make up for what we’ve lost during the lockdown and to keep up with population growth – so another tough year in the labour market coming up for Alberta,” Roach said.
While oil prices have rebounded since they dove into negative territory during the height of the first wave of COVID-19, ATB noted prices and global demand for oil remain soft with the price of a barrel of West Texas Intermediate potentially staying below US$50 for the next two years.
Oil and gas capital spending in Alberta is also forecast to remain low next year.
“Like the overall economy, things are starting to move in the overall right direction. Global demand has started to come back up as economies around the world have reopened. We’re waiting always anxiously to see what the OPEC plus countries will do. So far, they’ve kept oil production in check. If those two things continue, the Alberta oilpatch will recover – but again, it’s a long-term process. It’s like the rest of the economy. It’s going to take a year or two before we’re back to normal.”
The silver lining is that not every industry has taken a hit. Our agriculture sector, for example, has performed relatively well, according to ATB.
“Meat-packing plants suffered and there were some labour issues, but overall it looks like it’s going to be a good harvest in parts of the province and food manufacturing has been performing well this year,” Roach said. “So on that front at least, bit of a bright spot within the provincial economy.”
– With files from Bindu Suri
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