What’s ailing Alberta’s economy

Alberta’s economy is stable and growing, but its future is uncertain, says the newest outlook report from ATB Financial.

The bank forecasts real GDP growth of 2.3% for 2018, down from 4.4% in 2017, and 2.1% growth for both 2019 and 2020.

The main challenges for the province include the oil surplus and low price of western Canadian heavy, and related pipeline project hurdles. Added to that is the rising risk of a global economic downturn, the report says.

Read: The road ahead for Canadian oil producers

While employment is expanding overall and wages are high—ATB Financial forecasts that the province’s unemployment rate will average 6.8% this year and 6.6% in 2019—the labour market is “expanding slowly and inconsistently across sectors,” the report says.

There were strong job numbers in August, the report adds, but declines of 2,900 in September and 2,700 in October.

In the real estate space, housing starts are falling due to an oversupply and rising borrowing costs. “As of October, housing starts fell to their lowest point so far this year and to their lowest level since May 2009,” the report says.

One bright light is the potential for the U.S.-Mexico-Canada Agreement (USMCA) to bolster trade and allow for increased market access. There are some concerns about how the deal will be handled going forward, but “agriculture as a whole is expected to perform well over the next few years,” the report says.

Yet, persistent economic issues mean the “robust economy of five years ago seems more and more distant.”

Last month, two separate reports pointed to lower growth and competitiveness for Canada as a whole, based on factors such as moderating growth and weak capital investment. Deloitte Economic Advisory, in its report, said national growth as low as 1.4% was a possibility by 2020.

The IMF’s World Economic Outlook for October pegged Canadian growth at 2.1% for this year and 2% for 2019.

Read the full ATB Financial report.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.