RBC sees trouble ahead

Bank predicts Alberta will go into recession

RBC Economics has joined the Conference Board of Canada in forecasting a recession for Alberta, saying real GDP in the province will decline by one per cent this year.

The conference board last week said Alberta can’t avoid a recession in 2015, while predicting the economy will fall by 0.7 per cent, following 4.4 per cent growth last year.

“Alberta’s energy sector continues to bear the brunt of the drop in oil prices, but the broader effects have yet to be felt fully and the resilience of Alberta’s non- energy sectors will likely come under more intense pressure in the coming months,” Craig Wright, RBC senior vice- president and chief economist, said in a statement.

Wright said RBC expects energy prices will see a gradual recovery and help contribute to growth of 1.7 per cent in 2016.

The RBC report said the annual employment growth will fall from 2.2 per cent in 2014 to 0.4 per cent this year and 0.9 per cent in 2016. It forecasts retail sales will contract by 0.3 per cent this year, after growing 7.5 per cent in 2014. Sales are expected to rebound with 3.6 per cent growth in 2016.

It said recent economic signals suggest “plummeting confidence in the province have largely abated in recent months, with the drubbing in the housing market stabilizing and stream of layoffs announcements not denting employment in a material way, so far, at least.”

Last week, Statistics Canada reported the collapse in oil prices helped shrink Canada’s real gross domestic product in the first quarter by 0.6 per cent on an annualized basis.

Todd Hirsch, chief economist with ATB Financial, said 2015 is shaping up as a slow year for Alberta’s economy.

“Still, growth had been exceptionally strong over the last decadeand- a- half, and that has lifted most people’s wages and wealth. In fact, Albertans have the lowest probability of being low income or holding no wealth,” he said.

A Statistics Canada report Wednesday on the distribution of wealth among families in Canada found only 2.1 per cent of Alberta families were considered to be “low income or holding no wealth” in 2013.

… the resilience of Alberta’s non- energy sectors will likely come under more intense pressure in the coming months.