Alberta clears recession, challenges remain
Calgary - Alberta has said goodbye to the recession, but it will likely be a few more years before a stronger and more resilient economy fully emerges. Still, there is some improvement with oil and gas, agriculture, food processing, tourism, retail and manufacturing all experiencing modest growth.
ATB Financial released its latest Alberta Economic Outlook, providing insight into what may happen in the months ahead.
Capturing five primary economic indicators, the key results are:
• Alberta emerges from two years of recession with real GDP growth of around three per cent.
• Retail and housing sector performance are higher.
• Oil prices have dipped, and are expected to average below $US 50 in 2017.
• Trade talks with US pose a risk to the economy.
• Tourism, agriculture and agri-food will continue to lead growth but the oil sector remains the key driver in the province.
• Net out-migration to other provinces still likely to taper off later this year.
"The energy sector continues to be challenged by oil prices hovering below $US 50 per barrel," says Todd Hirsch, ATB Financial's Chief Economist. "At those levels, Alberta's energy sector struggles. Drilling activity and hiring has picked up modestly, but growth in the sector remains tenuous and not likely to snap back to pre-recession levels anytime soon."
The labour market is adding jobssome 35,000 over the last 12 months (+1.5 per cent), though positions have tended to be lower paying and and hiring in the private sector has been lagging.
"Alberta's economy is recovering, but it is not returning to what it looked like in 2014," says Hirsch. "Instead, the economy is evolving into one that is more diversified, and more typical of other Canadian provinces. It is a slow process and it may be a few more years before we see a full economic recovery."
ATB Financial's Economics and Research team is forecasting real GDP growth of 3.2 per cent this year, followed by a more modest expansion of 2.1 per cent in 2018.