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Alberta’s economy is in generally good shape with growth forecast to outpace the national average, according to ATB’s latest economic outlook, though it warns that high interest rates, continued global political uncertainty and threats of drought and wildfires could affect that outlook.
The report was released Wednesday and predicts the province will see real GDP — an inflation-adjusted measure — will grow by 2.3 per cent this year, and then up to 2.7 per cent in the following year.
“Alberta’s economy continues to push through inflation and interest rate headwinds,” the report states.
Here’s a breakdown of some of the other details contained in Wednesday’s report.
The big picture
The report portrays a province with a largely promising outlook for the coming years, though elements of uncertainty linger.
In its baseline, or medium case, the authors characterize the provincial economy as now being in “expansion mode,” having recovered in 2022 the lost output from prior recessions.
They expect Alberta to continue to lead all provinces in population growth while also outpacing the national economy in job creation.
It forecasts oil prices to be near the US$74 mark forecast in the most recent provincial budget, before falling to US$69 in 2026.
Unemployment is expected to rise slightly this year to 6.1 per cent measured as an annual, average percentage before falling below the six per cent mark in the following two years.
Financial pressures on consumers will begin to ease, according to the report, but will also remain prominent enough that consumer spending and business investment may slow down.
“Given the uncertainty, it’s best to plan for a range of plausible outcomes.”
Alberta’s economy is in generally good shape with growth forecast to outpace the national average, according to ATB’s latest economic outlook, though it warns that high interest rates, continued global political uncertainty and threats of drought and wildfires could affect that outlook.
The report was released Wednesday and predicts the province will see real GDP — an inflation-adjusted measure — will grow by 2.3 per cent this year, and then up to 2.7 per cent in the following year.
“Alberta’s economy continues to push through inflation and interest rate headwinds,” the report states.
Here’s a breakdown of some of the other details contained in Wednesday’s report.
The big picture
The report portrays a province with a largely promising outlook for the coming years, though elements of uncertainty linger.
In its baseline, or medium case, the authors characterize the provincial economy as now being in “expansion mode,” having recovered in 2022 the lost output from prior recessions.
They expect Alberta to continue to lead all provinces in population growth while also outpacing the national economy in job creation.
It forecasts oil prices to be near the US$74 mark forecast in the most recent provincial budget, before falling to US$69 in 2026.
Unemployment is expected to rise slightly this year to 6.1 per cent measured as an annual, average percentage before falling below the six per cent mark in the following two years.
Financial pressures on consumers will begin to ease, according to the report, but will also remain prominent enough that consumer spending and business investment may slow down.
“Given the uncertainty, it’s best to plan for a range of plausible outcomes.”
Reasons for optimism
The report acknowledges that Alberta’s economy is “highly exposed to global risks” but also finds reasons for optimism that the downside of those risks won’t fully materialize.
It lists likely improved market access for Alberta’s energy sector with the expected Trans Mountain pipeline expansion project expected to be online by mid-year, adding 590,000 barrels per day of new oil pipeline capacity.
Also, the Coastal GasLink pipeline has finished construction and will link to LNG Canada, supporting Alberta natural gas prices that have stumbled in recent months thanks to a glut of supply from the unusually warm winter weather.
Sources of uncertainty
Forecasts are limited by the reality of unforeseen events arising.
The report describes the degree of uncertainty as “particularly high” at the moment, citing the ongoing war in Ukraine, China’s “wobbly” economic trajectory, and a slew of upcoming federal elections across the globe, including in the United States.
While the report’s authors are optimistic interest rates will be cut as soon as June, they also acknowledge “persistent wage growth and sluggish productivity” could see those cuts pushed back.
Inflation
“Inflation storm clouds are slowly parting,” the reports states, with the inflation rate falling from a peak of 8.1 per cent in the summer of 2022 down to three per cent in recent weeks and approaching two per cent by early 2025.
However, it remains a problem for many, with prices now 14 per cent higher than in January 2021, led by shelter costs which the authors say has replaced food as the new inflation problem.
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