Alberta’s ATB economic forecasts will be more optimistic

peterpressmanMay 19, 2022

Russia’s invasion of Ukraine and rising oil prices have contributed to the rise in Alberta’s GDP.

ATB predicts that Alberta’s real GDP will rise by 5% in 2022, primarily due to rising oil and gas prices. Photo by Christopher Laundry / /Post media

Alberta is progressing at a better economic year than previously predicted, largely due to Russia’s invasion of Ukraine, but if the conflict persists for a long time, the conflict can have some negative effects.

Roberta’s deputy chief economist, Robroch, said Thursday that Alberta’s GDP is expected to rise by 5% from 4.4% before the war. This is a positive report for the state, but Roach said there were some headwinds.

Much of the aggressiveness has been driven by the oil and gas sector, which continues to exceed expectations, primarily for countries with wars and fuel and energy embargoes from Russia and its allies. This is pushing up oil and gas demand from Canada and straining other global supplies.

“Alberta is a decent year and I think there is overall economic growth, but it depends on many individuals, families and businesses,” he said. “It may not seem like a particularly good year as the turmoil continues and we are trying to recover from the pandemic of the last two years.”

These results show that despite continued efforts to diversify Alberta’s economy and most sectors recovering from the pandemic, the state is still economically alive and dead on oil and gas. increase.

Roach does not mean that government and private industry should not pursue diversification, but emphasizes how far they must go to provide some balance.

He pointed out venture capital investment in the technology sector and startups as an example of this. Despite a record $ 466 million investment in Alberta in the first quarter, this is inferior to the level of capital investment in the energy sector before 2014-15.

“The amount of venture capital that flows into the state is a round-off error in the amount of capital investment that the oil and gas sector spends each year,” he said. “That’s good, but it emphasizes that the amount of economic boost that comes from a small increase in oil and gas investment can actually outweigh even the significant increase in other sectors. . “

Trevor Tombe, a professor of economics at the University of Calgary and a researcher at the School of Public Policy, estimates pre-bankruptcy oil and gas investment to be around $ 40 to $ 50 billion annually. Today, the sector is beginning to benefit from these major investments, with much less book investment.

The forecast further predicts that Alberta’s GDP growth will drop to 3.4% in 2023 and 2.7% the following year.

The report also predicts Alberta’s annual unemployment rate at 6.7%, but the state is currently at 5.9%. According to Roach, this is because, despite rapid employment growth, the pace of people returning to the workforce is likely to outpace the number of jobs online.

There are other challenges in the future.

The war has inflated the value of other commodities such as wheat, but those benefits in the agricultural sector have been largely offset by rising costs of inputs such as fertilizers due to the war and meteorological disasters.

Inflation remains a major issue. Roach said he hopes the Bank of Canada will be able to curb rising living costs as usual by raising interest rates, but that’s not a guarantee. This is due to global problems that are driving energy and food prices soaring. He also pointed out that the pandemic and the possibility of further supply chain problems in China or elsewhere could push costs further and cause a pinch point unaffected by interest rates.

“It’s a bit like chemotherapy, where the treatment attempted can have many adverse effects,” he said. “There is concern that if that doesn’t work, inflation won’t go down. It’s a situation that actually reduces economic production and slows growth without significantly impacting inflation. That’s the worst. This is the scenario. “

Not all sectors have returned to pre-pandemic levels.

The tourism and hospitality sector, with some progress, lags behind other economies in recovery. Tonbe said recovery is only a matter of time and that various levels of government are limited to levers that can be pulled to support the sector. The best they can do is manage the end of public health to prevent further restrictions.

He also said he did not expect the future resignation of Prime Minister Jason Kenny to take the state out of its orbit.

“Government isn’t as important as people think about how the economy grows or shrinks. They’re only important at the limits. They can tweak things here and there,” Tombe said. rice field. “In the short term, it doesn’t matter who the prime minister is or who the ruling party is. Especially in an economy like Alberta, it goes up and down based on out-of-state factors.”

Jaldrich@postmedia.com

twitter: @ JoshAldrich03