Alberta economy may be shaking slump
The firming of oil prices means Alberta should have one of Canada’s fastest-growing economies this year, BMP Financial Group chief economist Douglas Porter says.
Porter, in Edmonton this week for client presentations, said Tuesday improvements will also be assisted by government spending and stronger retail sales.
Here’s a condensed, edited version of an interview with Porter:
Q What do you think is in store for the province in 2017?
A “In some ways it’s almost textbook what’s happened. We can basically follow along with oil prices to get a good idea of the (economic) ebbs and flows. In recent months it does seem to be stabilized and maybe improving.
“I’m encouraged oil is coming back (to about US$51 a barrel for West Texas Intermediate) after the March weakness … To me that is a key figure. As long as we hold above $50, I think that’s enough to stabilize the Alberta economy. I don’t think that’s enough to turn things around quickly.”
Q Some analysts are calling for prices to hit US$60 a barrel in three months and US$70 by the end of the year. What’s your estimate?
A While US$70 is optimistic, it can’t be ruled out, but there’s also a chance prices will drop to US$40.
His projection is for 2017 prices to average US$52, rising to US$59 next year.
Q How about jobs — the Calgary unemployment rate was down to 9.4 per cent in February from 9.8 per cent in January, while at the same time Edmonton unemployment rose slightly to 8.3 per cent from 8.1 per cent.
A “Unemployment seems to have peaked. It looks like it’s starting to drift down on a provincewide basis.”
Q And where is the overall Alberta economy going in 2017?
A Porter expects gross domestic product to rise by 2.7 per cent after inflation, following a total drop of more than six per cent for 2015 and 2016. That’s faster than the 2.5 per cent Canadian growth he anticipates this year. “Alberta is definitely one of the most cyclical economies in the country. Leading up to the crash, five per cent growth was not unusual … If there’s any province that can make up growth quickly, it’s Alberta.”