Rising oil prices to pull Alberta cities out of recession: report
The Conference Board of Canada predicts economic recovery in Alberta's two largest cities, as rising oil prices will trigger a resurgence in industries related both to the energy sector and consumer purchasing power
OTTAWA—Gradually rising oil prices are good news for Calgary and Edmonton, two cities that were hit hard by the drop in global oil prices over the last two years.
The two Alberta cities’ economies, both heavily reliant on the energy sector, are expected to rebound from recession.
This is according to The Conference Board of Canada’s Metropolitan Outlook: Spring 2017, which forecasts the economic growth of Canada’s largest cities.
“Following two years of declines, the tide is turning for Calgary and Edmonton,” said Alan Arcand, associate director, Centre for Municipal Studies at The Conference Board of Canada.
Arcand continued, “Oil prices have recovered somewhat from the lows reached in February 2016, and while energy investment in Alberta is expected to remain sluggish this year, oil production is set to rise. This will support growth in most major industries in both cities.”
The report says Calgary’s economy is expected to grow for the first time in three years, with real GDP projected to expand by 2.3 per cent in 2017.
8,800 jobs are expected to be created in 2017 and 10,100 in 2018, which reverses a decline in employment of 12,500 in 2016, and The Conference Board anticipates unemployment to drop from 2016’s 22-year high of 9.4 per cent to 8.0 per cent by 2018.
While rising oil prices are expected to turn Calgary’s fortunes around, The Conference Board says it will take several years for the available office space in the downtown core, which reached 25 per cent vacancy rate at the end of 2016, to be absorbed. This, combined with weak residential investment is expected to stall Calgary’s construction sector until 2018.
Edmonton’s economy is also expected to benefit from higher oil prices, and to expand by 2.4 per cent in 2017, which The Conference Board says should generate roughly 5,700 new jobs, up from only 170 new jobs added in 2016.
The city is forecast to see growth in its goods-producing industries and its construction industry, which should rebound from two years of decline due to increased activity in non-residential and infrastructure investment projects.
With economic growth comes more disposal income, and this means Edmontonions are expected to spend more, spurring growth in personal services industries and wholesale and retail trade.
The Conference Board says the city’s public sector will continue to support modest economic growth as well.
While oil recovery brings good tidings to Western Canada, Toronto is expected to lead the charge as the fastest-growing metropolitan economy in 2017, boasting GDP growth of 2.6 per cent.
Vancouver is forecast to come in a strong second, at 2.4 per cent GDP growth.