Sobering news today for Alberta’s economy.
It continues to struggle but the good news is that ATB Financial doesn’t expect the province to sink into another recession year.
In its Alberta Economic Outlook, which was released Tuesday, the financial institution forecasts economic growth of 0.8 per cent this year for Alberta followed by two per cent real GDP growth in 2020.
“Alberta’s economy is facing challenges from all sides — from the lack of pipeline capacity to trade wars — which is why ATB is forecasting marginal growth this year,” said ATB’s Chief Economist Todd Hirsch in a news release. “At the same time, we are forecasting growth of 2.0 per cent in 2020 assuming some of the transportation issues clogging up the oil patch will be resolved and investment in new production will increase.
“Despite the global headwinds and ongoing pipeline challenges the Alberta economy is still forecast to grow, albeit less than 1.0 per cent this year.”
ATB said its outlook reflects the challenge insufficient pipeline capacity is posing for the province’s economy which is being influenced by a sluggish oil and gas sector dampening job creation, consumer spending and construction activity.
The report also said: capital spending in the oil and gas sector remains soft as investors wait until there is more assurance that pipeline projects will be completed; the differential between the Alberta natural gas price benchmark and the North American benchmark has widened; the number of unemployed Albertans is growing and the average unemployment rate over the first seven months of 2019 was 6.9 per cent; consumer spending is down; building permits are down this year; global economic headwinds have been increasing; and Alberta’s export sector is being hindered by Chinese restrictions on key Canadian agricultural products and a slowing global economy.
“Alberta’s economy is stuck in low gear while we wait for the new pipeline capacity that is needed to move more Alberta oil to market,” it said.