Pierre Cléroux is vice-president or research and chief economist at BDC (Business Development Bank of Canada).
What’s your sense of where the Alberta economy is and what its outlook is for 2019?
Cléroux: I think the economy is going to have slow growth for 2019 and we’re going to see more growth for 2020. The reason why our analysis is showing that is as you know the world oil price, but mostly the Canadian one, has been declining over the last few months.
I think this is going to improve during the year to give more perspective for 2020. We’re going to see more economic activities in about 12 months. The world price will come back because the demand is still strong and Russia and Saudi Arabia made an agreement to reduce the world’s supply so that should help the price to come back.
The action from the Alberta government (on mandatory cuts to oil production) is really helping the price. We should have a decision on the Trans Mountain pipeline as well. All this is going to help the price which will help the economy as well.
What’s the province’s labour market going to look like this year?
Cléroux: The Alberta economy has created a positive number of jobs for 2018. That’s what I see for 2019. But the growth is going to be small. We’re not going to reduce the unemployment rate massively. I think we’ll have to wait until 2020 to see the situation improve.
How important is it for Alberta to diversify its economy and move away from its heavy reliance on the energy sector?
Cléroux: I think it’s important. I think the oil sector is going to remain very important for Alberta for many years. But to diversify is important because there’s a lot of cycles in resources, including in oil. As there is more and more production around the world, it’s keeping the price lower and that’s what people expect for the next decade.
So just for that, it’s a good idea to diversify. I wouldn’t move away from it because it’s a great resource and it’s one of the great assets of the province. But there’s no doubt being diversified is a great strategy.
What will it take to turn around Alberta’s economy?
Cléroux: The oil price has a big impact because the price dictates future investments. Before 2014, we used to see about $80 billion in investment in energy in Alberta. Now we’re down to about $40 billion. So the price is a very important signal for future investment. As the price is improving in 2019, that will help the economy to get some speed again.
Confidence by Alberta business owners is quite low. What will they need to see in the coming year to improve that confidence?
Cléroux: What we need to do is to do everything we can to reduce uncertainty. There’s a lot of uncertainty related to the pipeline infrastructure. That will really help to build confidence in the economy with the entrepreneurs. It’s not only a question of price. But if we are able to take some actions to reduce the uncertainty around the infrastructure that we need to build that will be a big help.
– Mario Toneguzzi for Calgary’s Business