Alberta’s economy has been riding high for more than four years. Now, with low and volatile oil prices, the question is how slow will the economy go?
ATB Financial chief economist Todd Hirsch attempts to answer that question in the ATB Economic Outlook. The report analyzes the province’s economic happenings and outlines what may occur over the next three months.
- Alberta’s economy is set to slow significantly in 2015 with growth at half the rate seen last year.
- Labour markets are currently balanced, but a slightly higher level of unemployment is anticipated.
- Weak oil and natural gas prices will curtail investment in the energy sector.
- Housing starts are stable, but will likely show some modest decrease this year.
- In-migration will continue to be positive but will slow significantly from 2014.
“The economic picture painted by our research certainly shows a slowdown,” said Hirsch, “but it’s not doom and gloom here. We’re still on track with Canadian averages, we’re just not full-steam ahead as we have been in recent years.”
So how exactly will Alberta’s future look like considering recent oil costs? That’s hard to predict. But the report does look at where the oil price pendulum could swing and outlines three different scenarios. Each scenario includes commentary on how the unemployment rate would be impacted, what investment looks like and other important impacts.
“Anything could happen, but we feel the most probable scenario is one that returns oil prices to a reasonable range by the end of 2015,” said Hirsch, “That scenario, number two in The Economic Outlook, would put the average oil price between C$55 and C$70 per barrel.
“The agriculture, forestry and tourism industries all benefit from low oil prices and a soft Canadian dollar. They’ll do well in 2015, with tractors, trucks and tourists fuelling up and spending their money in Canada,” said Hirsch.