Calgary, AB – We’re starting to see and feel the effects of the low price of oil. Our economy has slowed and various industries are tightening their belts. Many Albertans and others across the country are asking what will happen next.
ATB Financial’s Chief Economist Todd Hirsch is addressing that question with findings from the latest Alberta Economic Outlook. Released today, it summarizes research on Alberta’s most important sectors, analyzes the province’s economic happenings and outlines what may occur over the next three months (April-June 2015).
Capturing five primary economic indicators, the highlights from the Alberta Economic Outlook include:
- Alberta’s economy will slow significantly in 2015 with real GDP growth of 0.8 per cent.
- Labour markets are being affected by rising unemployment, which is expected to land at six per cent for 2015.
- Consistently weak oil and natural gas prices have curtailed investment in the energy sector.
- Housing starts remain stable, but softness in residential real estate suggests construction activity will cool.
- Net inter-provincial in-migration will slow but should remain positive for the year.
“The economic slowdown is something we anticipated and started to talk widely about in January with the release of our first Economic Outlook of 2015,” said Hirsch. “What’s changed since then is the timing of when energy prices are expected to rebound. We now project them to stabilize and begin to gradually rise a bit later, likely at the end of summer and into the fall.”
The Economic Outlook provides commentary on various sectors in our province including retail, housing and manufacturing. It also outlines three different scenarios for average oil prices in 2015, each with its own list of implications for the economy.
“The future is difficult to predict,” said Hirsch. “However, our research suggests that scenario number two in the Economic Outlook is the most probable. It puts the average oil price between $US 50-60 per barrel by the end of the year.”
Despite the challenges faced by the energy sector, there are some industries that are facing a brighter 2015.
“Agriculture, forestry and tourism will likely benefit due to lower fuel prices. The lower Canadian dollar and commodity prices (particularly higher cattle prices) also help provide some cushion to minimize the impact being felt during these next few months,” said Hirsch.
“While it will be a challenging year, Albertans shouldn’t panic,” said Hirsch. “It will by no means be the worst economic year in recent history. Six years ago the province suffered a deep contraction (-4.2 per cent). As hard as it will be for a lot of people, this slowdown is a normal part of the cyclical nature of Alberta’s economy.”
For the complete Q2 Economic Outlook, please click here.