An Alberta financial institution is projecting that the provincial economy could be in a better position by 2023 than it was before the COVID-19 pandemic hit.
ATB Financial released its latest economic outlook for Alberta on Thursday. The financial service provider said it forecasts the province’s real GDP will grow by approximately 4.1 per cent this year and then by 2.6 per cent in 2022.
However, the outlook notes that growth hinges on two significant expectations: “that Canada will be through the worst of the pandemic by the fall and that global demand for oil will continue to grow with OPEC limits on supply.”
ATB Financial’s vice-president and chief economist also noted the recovery won’t be the same for everyone.
“It’s unclear how many jobs lost during the pandemic will return,” Todd Hirsch said in a news release.
“Although we are forecasting employment growth of almost 4 per cent, we anticipate Alberta’s jobless rate will remain relatively high throughout this year, hovering around 10 per cent.”
Alberta’s unemployment rate has been on somewhat of a downward trend lately. Last month it dropped 0.8 percentage points to 9.9 per cent, the lowest it has been since March 2020.
Jessica Culo, the Edmonton president of the staffing firm Express Employment Professionals, said in the company’s first quarter, the number of job placements it was involved in “rivals the entire year of 2020.”
“(There has been a) shift in confidence,” she told Global News on Thursday. “Companies are bringing on permanent employees.
“The industries we’re seeing a lot of growth in include retail and trade, warehousing and distribution, manufacturing and construction, finance, insurance as well as food services.”
Culo noted there are sectors still struggling considerably from her perspective.
“In hospitality — in the entertainment and events business — I’ve seen candidates leave that industry because of the multiple shutdowns, and don’t plan on going back.”
In its latest outlook, ATB Financial says it is projecting the provincial economy will experience “a K-shaped recovery.”
“Higher-income earners who didn’t lose their jobs on the upper branch will return to normal and drive consumer spending,” the financial institution said.
“At the same time, low-income earners on the lower branch may face chronic unemployment because they don’t have jobs to go back to and emergency government relief programs are winding down.”
ATB Financial said it expects capital spending within the fossil fuel sector will “still be down compared to 2019 — which was already a slow year.”
But ATB said the oil sector has been buoyed by a rise in prices and noted oil production returned to pre-pandemic levels late last year. The financial institution said it is forecasting oil prices for 2021 to be at US$51 per barrel.
The president of an oil gas industry lobby group told Global News that there is a sense of cautious optimism in that sector and an increase in investment is expected in Alberta this year.
“We think that the number of wells being drilled in the province will go up by 10 per cent, and (there is) a general sense that this year will be better than last year,” said Tim McMillan of the Canadian Association of Petroleum Producers.
“2020 was a terrible year. We’re starting with a really low baseline. But we’re going in the right direction. The more investment we can attract, the more jobs we’ll create.”
ATB’s outlook notes that retail spending fared reasonably well in Alberta in 2020.
“If motor vehicles and gas stations are excluded, it increased by 2.7 per cent,” the report says.
“Household savings accumulated during the pandemic should boost retail sales in 2021 but some of this will be offset by the end of emergency income support and ongoing unemployment.”
ATB’s outlook notes that while housing starts and residential building permits were up in January, it expects growth to be limited in that sector at least in the short term because of “weak population” growth and a prolonged road to economic recovery for the province.
“As Alberta’s economy recovers, there are a number of bright spots to watch, including our growing tech sector which has attracted investment from several big companies,” Hirsch said. “Our province’s agriculture and agri-food sector also continues to perform well with the cattle industry rebounding quickly from pandemic-related challenges.
“There are a lot of reasons to be optimistic about Alberta’s economy in the long run.”
–With files from Global News’ Melissa Gilligan and Sarah Ryan