Economic recovery in sight, but not until 2017
OTTAWA, June 13, 2016 /CNW/ – With another difficult drilling season, Alberta is dealing with the worst economic downturn in 30 years. Alberta will be facing another year of recession, contracting by 2 per cent this year, according to The Conference Board of Canada’s latest Provincial Outlook: Spring 2016.
“Nearly all sectors of the economy are struggling and, if that was not enough, the wildfires in northern Alberta have added to the economic woes of the province,” said Marie-Christine Bernard, Associate Director, Provincial Forecast. “Wildfires in Northern Alberta temporarily shut crude oil production from the oil stands and hampered economic activity in the region. The good news is that oil prices are improving and a recovery is forecast for the province next year.”
- With another difficult drilling season, Alberta’s real GDP is expected to contract by 2 per cent this year.
- Alberta’s economy should return to positive territory in 2017, posting a real GDP gain of 2.5 per cent fuelled in part by the rebuild effort in Fort McMurray.
- Only four provinces are expected to see real GDP growth above 2 per cent this year: British Columbia, Ontario, Manitoba, and Prince Edward Island.
- The commodity price slump will continue to hurt the economies of Newfoundland and Labrador and Saskatchewan, and Alberta.
Crude oil prices have recovered from the lows reached at the beginning of this year but imbalances remain and oil prices are expected to continue to increase at a modest pace over the next 18 months. This slow recovery in oil prices should ease lay-offs and cuts to capital budgets in the oil and gas sectors in the coming months. This, in turn, should provide additional benefits to sectors that depend on the oil and gas industries and lay the foundation for positive economic growth next year.
Furthermore, rebuilding efforts will play a role in Alberta’s stronger economic growth in 2017. As displaced Fort McMurray residents return to their homes, oil production resumes, and rebuilding of up to 2,400 dwellings that were destroyed or severely damaged in the fire gets underway, these efforts will help bolster real economic activity in the province. Overall, real GDP is projected to rise by 2.5 per cent in 2017, with 0.4 percentage points coming from the rebuilding effort in Fort McMurray.