Alberta is looking at the possibility of a jobless recovery in 2021, according to ATB’s chief economist.
Todd Hirsch told Calgary Economic Development’s (CED) economic outlook event he expects Alberta’s GDP to contract by 7.1 per cent this year and then bounce back by 3.3 percent in 2021. But unemployment will only improve to 11.0 per cent in 2021 from 11.4 per cent this year.
Hirsch called it “a lost decade” of jobs, dating back to the economy’s previous high of 2014.
“That is really challenging because we have to be focused entirely on jobs in our community and how we create those jobs,” Calgary Mayor Naheed Nenshi said.
“But putting in the building blocks for what happens next matters.”
CED president and CEO Mary Moran said Calgary’s economy is facing three challenges on top of the coronavirus pandemic — the restructuring of the oil industry, the drop in oil prices because of recent price wars, and the fall in economic activity due to COVID-19.
Moran also said there is a paradigm shift underway.
“The world is transforming at a scale and a speed never seen before, and our accepted assumptions are being challenged on everything from the economy to the way we work to social justice,” Moran told the virtual conference. “And at the same time, we are pushing the limits of technology and innovation beyond what was even possible just a few years ago.
“The ‘white space’ of today is the opportunity for digital transformation.”
A CED study commissioned in 2019 forecasted Calgary companies would lead digital transformation across all sectors by 2022 to the tune of $18.4 billion.
“Digital transformation isn’t waiting for anyone,” Moran said Tuesday. “It’s happening globally and it’s happening here. And in Calgary, we are already on the road to a digital economy.”
Moran said the doubling of tech companies in Calgary by 2030 signals a tech boom.
But Platform Calgary has a higher goal — tripling the size of the innovation ecosystem in the same time period, resulting in 1000 large tech companies and 2000 startups.
“It’s a very wide and diverse set of startup companies that are here.”
But the existing supports for tech startups don’t fit a city Calgary’s size.
“Compared to other jurisdictions, we have relatively immature capital formation,” Platform Calgary board chair Evan Hu said. “It’s underweight. It is active. There’s good things happening, but it should be five times larger for a city of our size.”
CED identified four “emerging and growth clusters” in the city: tourism, creative industries, life sciences and health, and financial services.
The business development organization expects agribusiness, transportation and logistics, and the energy industry to continue to play major roles in the economy.
ATB’s chief economist says the energy industry’s role, however, has changed.
“It used to be the growth engine of our province, going back to the early part of the last decade of 2010-2014,” Hirsch said Tuesday. “Now it is a backbone. It’s no longer a growth engine. It’s a backbone.
“But of course, you want to protect the backbone — you want to make sure it’s in good shape.”
Moran said the energy industry is “undeniably important” for the city, province and country, likening government intervention to buttress the industry to a “defense strategy.”
“But in order for us to create new jobs and fill that office space, we also need an offense strategy,” Moran said.
Moran said tech could help take up some of the downtown vacancy that CBRE pegged at 28.7 per cent on Sept. 30.
Hirsch said a look back at the city’s history can help find direction for the future.
“This city was built by people that defied the odds and I think that is going to continue. That’s why I’m so hopeful about Calgary and its ability to adapt”