In January, the Conference Board of Canada warned that Alberta could slip into recession and today, opinion regarding the province’s economy remains unchanged.
Speaking to the board’s Western Business Outlook event on Tuesday in Edmonton, the conference board chief economist Glen Hodgson said, “My fear is that the forecast is still a little bit too optimistic”.
Given the downturn in Alberta’s energy sector, the previous four years of “phenomenal” growth will take “a significant hit” in 2015, the conference was told.
This will lead to reductions in energy companies’ capital spending plans, a shortfall in royalty revenues and a slowdown in people moving to Alberta from within and outside Canada. It will also mean that gains in Albertans’ primary household income will be reduced to one per cent in 2015. This has led to decreased consumer confidence while real estate sales, prices and housing starts are trending down.
In January, the conference board warned that Alberta could slip into recession in 2015 and would feel the largest drop in gross domestic product of any province. The board also warned that business investment in 2015 could be down by $12 billion.
In February, the organization forecast that while Canada’s GDP will grow 1.9 per cent this year, Alberta’s economy will shrink 1.5 per cent. Alberta’s ability to recover from the downturn will depend on oil prices increasing. West Texas Intermediate crude that traded at more than $100 US last summer is now around $50.
With stronger oil prices into 2016, Alberta should see “moderate” 1.5-per-cent growth compared to 2.3 per cent for Canada. “Alberta will re-emerge as a strong part of Canada’s economy,” Antunes said.
Brad Ferguson, president of the Edmonton Economic Development Corp., said Alberta’s story has sounded “unnecessarily negative” of late and he believes that Edmonton is well-positioned to deal with its share of Alberta’s economic challenges, Ferguson told the conference.