RBC Economics recently published their June 2021 Provincial Outlook, and while there is some good news for Alberta economically-speaking, it’s not amazing news.
Robert Hogue and Carrie Freestone, two economists at RBS, wrote the report, which showed Alberta as having the worst economic picture in 2021 of all the Canadian provinces.
Alberta’s GDP shrank by 8.3% last year, the largest drop in Canada, and its largest drop on record. The next lowest GDP growth was -5.3%, in both Newfoundland and Labrador and Quebec. It was also the national average.
Only Alberta’s GDP growth was below the national average, but it was so low that it brought the national average down lower than 7 provinces and tied with the other two.
That record-breaking decline was brought about by the pandemic, which itself came on the heels of a massive oil-price crash at the start of 2020.
The two economists expect Alberta’s GDP to improve this year, however, putting it back in the black with 5.9% growth, the 5th highest forecast in the country, and only slightly behind the national average of 6.3%.
Even then, the growth this year won’t be quite enough to make up for last year’s loss. We’ll still be at a net loss of 2.3% between the two years.
Things will really take off for in Alberta in 2022, which coincidentally is the year leading up to the next provincial election. Hogue and Freestone predict that the province will have the highest GDP growth rate in the country: 4.89%.
Combine that with the combined -2.3% growth for 2020 and 2021, and we’re left with a net 3-year growth of 2.59% for 2020–2022.
GDP grew by only 0.1% in 2019, the first year the UCP were in office, which means the government could see a net growth of 2.49% during their first term.
That could be good news for a party that has seen a whole lot of bad news lately. They just need to hope that people will forget that they lost their jobs and had to close down their businesses during that time.
Hogue and Freestone expect Alberta’s energy sector could see some significant challenges for the rest of the year, as “uncertainty surrounding access to markets and capital will keep a lid on the sector’s capital expenditures this year”.
According to their report, Statistics Canada’s Capex survey shows a 3% rise in capital expenditures in the sector, but this will be a modest increase, “a shadow of what it was before the oil price crash of 2015-2016.”
And it’s unclear whether that will equate into jobs for oil and gas workers, let alone the over 40,000 jobs that have been lost since that price crash.