Another analyst sees return of growth
There was positive news for Alberta’s economy Monday as another analyst predicted solid, if unspectacular, growth in 2017 following two years of recession.
The provincial economy should increase by 2.2 per cent this year with the assistance of oil prices that will likely remain in the current US$50 to US$60 range for the foreseeable future, ATB Financial chief economist Todd Hirsch said.
“(Having) $55 oil is much better than $27 oil,” he told a Rotary Club of Edmonton luncheon.
“That has brought stability to the oil sector. The bad news is a lot of producers in this province had counted on prices being much higher.”
As a result, many planned projects will likely be shelved, Hirsch said.
The energy industry will remain the backbone of Alberta’s economy, but probably won’t be the massive growth engine it was in 2011 to 2014, when oil prices were as much as double their current level, he said.
“We do anticipate Alberta’s economy to return to some positive growth this year, two to twoand-a-half per cent, somewhere in that range, so somewhere half of what we experienced in 20102014.”
Hirsch’s forecast follows last week’s winter report by the Conference Board of Canada predicting Alberta’s economy will rise by 2.8 per cent in 2017, the fastest in Canada, after posting the country’s biggest drop in 2016.
At the same time, Finance Minister Joe Ceci said in his quarterly update that while he expects modest economic improvement this year, “We’re not out of the woods yet, far from it.”
Hirsch said most of the jobs lost since 2014 were in the high-paying oil and gas, construction and manufacturing industries, helping reduce the total wages paid in Alberta by 5.7 per cent.
The value of building permits issued in the province is down 26 per cent from two years ago, he said.
The Edmonton region appears to be bucking that trend, giving out $1.4 billion worth of permits in the final quarter of 2016, an eight per cent rise from the same period a year earlier compared to an 11 per cent drop for all of Alberta.
However, Edmonton chief economist John Rose warned the numbers may be a temporary uptick reflecting a response to changes in the building code.
Hirsch thinks Alberta’s unemployment rate, which hit 8.8 per cent in December, will stay around that point for at least the first half of the year because even as the economy improves, companies will be reluctant to hire more staff.
He does see bright spots. For example, he expects a third record year for tourism in the province, boosted by the country’s 150th birthday celebrations, a dollar likely to stay below 80 cents US, cheaper fuel costs and a strong American economy.
Agriculture and food should also be healthy as the changing market makes it easier for Alberta food companies to compete with big eastern firms, he said.