Alberta’s economy remains sluggish, though real GDP growth should rebound to 1.9 per cent this year from 0.5 per cent in 2019 as mandated oil production cuts ease, according to the Provincial Monitor report released Wednesday by BMO.
“After initially capping production at 3.56 mbpd (million barrels per day), the limit has been bumped up to 3.81 mbpd to start 2020, where it is currently expected to remain for the year. Longer term, with oilsands production still on the rise, limited pipeline capacity will remain a pressing issue. New capital investment is expected to stay limited,” said the report.
The forecast growth for the province will be tied for second in Canada with Quebec following the nation-leading 2.1 per cent expected growth for British Columbia.
In 2021, the report forecasts Alberta’s growth to be 1.8 per cent – tied with Ontario and Quebec – just behind leader British Columbia again at 2.1 per cent while Canada is expected to experience growth of 1.7 per cent this year and 1.8 per cent next year.
“The housing market is soft but stabilizing, with prices in Edmonton and Calgary down modestly from year-ago levels. Housing starts have found a footing, though well down from pre-shock levels,” said the BMO report about Alberta’s economy.
“Commercial real estate also remains awash in supply with vacancy rates topping 24 per cent in Calgary’s downtown office segment. The labour market shows slack, with employment unchanged from the start of 2018, and public-sector jobs down sharply in recent months. The jobless rate has nudged above seven per cent.”
Employment is expected to rise by 0.3 per cent this year and by another 0.8 per cent next year in Alberta.
The jobless rate will increase though to 7.2 per cent this year from 6.9 per cent in 2019 but drop down a little bit to 7.1 per cent in 2021.
The report said housing starts will drop from 27,400 in 2019 to 26,500 this year but rebound to 29,000 in 2021.
Mario Toneguzzi is a business reporter in Calgary.
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