CALGARY—Alberta has said goodbye to its recession, but it will likely be a few more years before a stronger and more resilient economy fully emerges.
This is according to ATB Financial, a provincial bank and Alberta crown-corporation, which has released a new economic outlook for the province.
ATB says that while Alberta’s economy will take some time before its back on its feet, there are encouraging signs in the short term: with oil and gas, agriculture, food processing, tourism, retail and manufacturing all experiencing modest growth. The housing sector is also performing well.
The bank’s report finds Alberta’s labour market has added roughly 35,000 jobs over the last 12 months (+1.5 per cent), though positions have tended to be lower paying and hiring in the private sector has been lagging.
“Alberta’s economy is recovering, but it is not returning to what it looked like in 2014,” said Todd Hirsch, ATB Financial’s chief economist.
Hirsch continued, “Instead, the economy is evolving into one that is more diversified, and more typical of other Canadian provinces. It is a slow process and it may be a few more years before we see a full economic recovery.”
ATB is forecasting real GDP growth of 3.2 per cent for the province this year, followed by a more modest expansion of 2.1 per cent in 2018.
Hirsch cautions that while 3.2 per cent GDP growth might sound good, it comes after two years of contraction where the Alberta economy shrank by about 7 per cent, so the growth projected for 2017 only recaptures roughly half the ground lost in 2015-2016.
When it comes to Alberta’s staple industrial sector, energy, things are not as dour as they were in 2015-2016 but challenges remain.
“The energy sector continues to be challenged by oil prices hovering below US$50 per barrel. At those levels, Alberta’s energy sector struggles. Drilling activity and hiring has picked up modestly, but growth in the sector remains tenuous and not likely to snap back to pre-recession levels anytime soon,” said Hirsch.
ATB says that oil remains the key driver in the province, despite the fact that tourism, agriculture and agri-food are leading the way in terms of growth.
Hirsch says that overall, ATB expects 2017 to be a good year for growth, however, a lot of Albertans are still going to be feeling the residuals of the recession from last year.