Pos­i­tive out­look for Al­berta: TD Bank

Lethbridge Herald - - FRONT PAGE - Bill Graveland THE CANADIAN PRESS — CAL­GARY

TD Bank says Al­berta’s bat­tered econ­omy is headed in the right di­rec­tion, but warns there are still a num­ber of hur­dles that could hin­der re­cov­ery.

A re­port re­leased Thurs­day by deputy chief econ­o­mist Derek Burleton is pre­dict­ing eco­nomic growth be­tween two and 2 1/2 per cent for Al­berta in the next year which fol­lows an in­crease of nearly 4.9 per cent in 2017.

“It was a nice bounce back last year, but growth is set­tling down this year and we’re of the mind that you’re gonna get a con­tin­ued mod­er­ate growth run over the next cou­ple of years as the econ­omy kinds of set­tles down,” Burleton said in an in­ter­view.

“I don’t think many were an­tic­i­pat­ing a heroic re­cov­ery de­spite the fact that the re­ces­sion was quite deep. Oil pro­duc­tion should grow de­spite some of the chal­lenges in terms of pipe­lines. That’ll get us two per cent which is not heroic.”

Burleton said Al­berta’s econ­omy is within a year of re­turn­ing “home” — a term used to char­ac­ter­ize full re­cov­ery from a re­ces­sion. How­ever, it could be an­other two years be­fore the job mar­ket fully re­cov­ers.

“Em­ploy­ment is back to where it was pre-re­ces­sion, but a lot of the jobs are self-em­ploy­ment, more of a free­lance type,” he said.

“Em­ploy­ers are kind of slow to bring back hir­ing and part of that does re­flect the lack­lus­tre in­vest­ment out­look over the next cou­ple of years.”

The re­port also notes that gov­ern­ment hir­ing, pri­mar­ily in the health and ed­u­ca­tion sec­tors, rose by nearly 10 per cent. Pri­vate sec­tor jobs fell by five per cent dur­ing the re­ces­sion.

Burleton said the lack of in­vest­ment in Al­berta, par­tic­u­larly in the oil and gas sec­tor, re­mains a con­cern.

“I think that’s the Achilles heel for re­cov­ery so far. It is ba­si­cally the miss­ing el­e­ment,” he said.

“In­vest­ment is not go­ing to be catch­ing fire soon. We’re not an­tic­i­pat­ing a lot of growth over the next few years and clearly there are some hur­dles there.”

Burleton said Al­berta could re­assert it­self as a leader in growth, but only if it deals with in­ad­e­quate pipe­line ca­pac­ity, reg­u­la­tory hur­dles, and elim­i­nat­ing the gov­ern­ment’s bud­get deficit.

“We still are of the mind that the econ­omy will re­assert it­self,” he said. “It may be a bit at odds given the tim­ing of this re­port just af­ter the Trans Moun­tain de­ci­sion and some of the con­cerns around the oil and gas sec­tor.”

Late last month the Fed­eral Court of Ap­peal quashed cabi­net ap­proval of the Trans Moun­tain ex­pan­sion project.

The fore­cast says there is rea­son for op­ti­mism, in­clud­ing the re­siliency of global oil de­mand and lim­ited sup­ply out­side of Al­berta, and de­creas­ing pro­duc­tion costs.

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