Alberta’s economy has outperformed the national economy
CALGARY — The vast majority of signals on Alberta’s dashboard are sending the same message, says TD Economics.
“Things are good.”
That’s the year it’s been in the province and the year it’s expected to continue to be into 2013.
And there’s no surprise why Alberta’s economy has outperformed the national economy by a wide margin this year.
The Conference Board of Canada says most of the key economic indicators for the province have been positive this year including labour markets, investment indicators and consumer demand. This has led to the province being a magnet for foreign and interprovincial migrants with the expanding energy sector the principal driver of overall growth.
After an expected 3.4 per cent gain this year, real GDP is forecast to advance by three per cent in 2013 and 3.3 per cent in 2014, just behind Saskatchewan’s pace, according to the board.
“For the first half of 2012, we were moving gangbusters. All the indicators were strong … right up until June,” says Ben Brunnen, chief economist with the Calgary Chamber of Commerce. “And then June hit and we started seeing some of those more substantial challenges coming forth through Greece and Europe and that’s when oil prices really took that hit down toward $80 (a barrel). I would say we geared down in June.”
“We are by far in a better position than anywhere else in North America. And our net migration numbers are showing that. People continue to be moving here. I think that trend is going to continue.”
But there are some issues which could impact Alberta’s economic growth. A skilled labour shortage could be a major impediment. And of course, global economic challenges in Europe and the United States in particular could slow down the Alberta machine.
Brunnen is forecasting provincial economic growth of 3.5 per cent to 3.8 per cent in 2013.
Todd Hirsch, senior economist with ATB Financial, says Alberta will be one of the country’s economic growth leaders with “nice moderate” growth of three to 3.5 per cent next year.
“We’re seeing a little bit of softness on those energy prices, just enough to kind of temper things a little bit. The energy companies would like to see those energy prices a little bit stronger but on the other side we’re seeing very, very good results in agriculture, in construction and the retail trade,” says Hirsch.
“Wages are still rising in Alberta and that’s supportive of the overall economy. And we’re still seeing interprovincial migration. I think that will continue into 2013. Even though there’s a little bit of softness on the oil side. The other sectors of the economy are actually doing quite well.”
Doug Porter, deputy chief economist with BMO Capital Markets, says one of the dominant stories, in not just the last couple of years but the last decade, has been the relative outperformance of Alberta and Saskatchewan versus the rest of the country.
“And I think that will continue in 2013 and even 2014. But having said that, the gap with the rest of the country is narrowing,” says Porter. “I still think Alberta is one of the strongest growing economies but its lead won’t be as dominant and of course one of the stories there is just simply the softening we’ve seen in oil prices relatively recently. We see a bit firmer prices next year but not much different from where we are today.”
Warren Jestin, senior vice-president and chief economist for Scotiabank, says the near-term outlook for the province is pretty good.
“Even with some downsizing of big projects, the big issue is more supply constraint with labour than an absence of projects that will be moving forward,” he says. “Growth that we have in our forecast next year of just a little under three per cent doesn’t sound that hot by historical standards but it’s nearly double what you’re seeing for all Canada.
“The near term looks relatively good and certainly if you’re in Alberta you’re feeling a whole lot more cheerful than if you’re in Greece, Spain, Portugal, Italy and wide variety of other countries around the world.”
In 2011, Alberta led the country with an estimated real GDP growth of 5.2 per cent which was also the fastest rate in the province in five years.