Calgary — The drop in oil prices has meant a tough year for Alberta’s economy. Today, ATB Financial is releasing its latest quarterly Alberta Economic Outlook, providing insight into what may happen in the months ahead.
Capturing five primary economic indicators, the key results from ATB’s Alberta Economic Outlook include:
- Alberta’s economy will contract by less than one per cent in 2015, returning gradually to growth by mid-to-late 2016.
- Oil prices remain low and volatile, suggesting that sustained price recovery is not on the immediate horizon.
- The petroleum sector and related industries are shedding workers, but other non-energy sectors are hiring.
- Housing starts are stable, but weakening consumer demand will likely weigh on residential prices and construction in the coming months.
- Net interprovincial in-migration remained strong in the first half of the year, but that could reverse by the end of the year.
“The drop in oil prices hit our province hard—and it hasn’t let up,” said Todd Hirsch, Chief Economist at ATB Financial. “Over the summer, we continued to experience volatility in the price of West Texas Intermediate. While still unstable, it is likely to trade around $US 45-50 per barrel for the remainder of the year, with a moderate increase to $US 55-60 by mid-to-late 2016.”
The Alberta Economic Outlook also looks at our province’s second largest sector: agriculture. It experienced a difficult season with drought causing some disappointing results for crop production in parts of the province.
But some sectors are reporting more positive news. As the Economic Outlook shows, cattle prices remained solid and hog prices had a bit of a rebound. Forestry also remains in good shape with strong prices for lumber, a resurging U.S. economy and a low Canadian dollar. Residential construction, retail and wholesale trade and manufacturing have also shown stability over the first three quarters of 2015.
Using these economic indicators, the Economic Outlook forecasts a contraction of 0.7 per cent of Alberta’s real GDP in 2015, with modest growth of close to 1.4 per cent in 2016. Still, the exact timing of the economic recovery is uncertain.
“It is a hard time for many Albertans. I’m often asked when things are going to turn around,” said Hirsch. “That’s difficult to predict. However, we do know that in order for our economy to stabilize and regain some balance, a number of things have to occur including an oil price rebound to around $US 60, a rebalancing of labour costs, strong performance in non-energy sectors and a low Canadian dollar.”
Find the complete Alberta Economic Outlook (Q4) here.