The Alberta government is forecasting the Alberta economy to regain its footing in 2020 with Real gross domestic product (GDP) growing by 2.5 per cent and surpassing pre‑recession levels.
In announcing its budget on Thursday, the government said this follows a period of weakness in 2019, when provincial economic activity stagnated amid pipeline delays and a slowdown in the global economy, and real GDP failed to gain ground.
“The turnaround in the economy in 2020 will be led by exports and supported by a rebound in capital spending. Investment outside oil and gas extraction remains a bright spot and will continue to advance this year. Sentiment is improving in the energy sector amid easing production constraints and additional takeaway capacity from pipeline debottle necking and expanding crude by rail shipments,” said the government.
“Oil production is set to rebound in 2020 and drive growth in Alberta’s exports. Oil and gas investment is anticipated to finally turn a corner, with companies expected to spend an additional $1.5 billion. Consumer spending is also forecast to improve, supported by employment gains and a growing population. As the economy moves into expansion, private sector investment and household spending will contribute more to growth.”
The government said rising oil production and manufacturing capacity expansions will continue to support exports.
“Real GDP growth is forecast to accelerate to an average of 2.8 per cent from 2021 to 2023. The road to recovery has been fraught with many challenges for the province in the past few years, mainly around market access for its energy products and lack of investment in the energy sector. The result is the longest recovery from a downturn on record in Alberta. While overall employment surpassed prerecession levels in 2018, the unemployment rate remains stubbornly high. It is expected to fall gradually to 5.1 per cent by 2023. Even though business investment is expected to improve, it will still be around 70 per cent of pre‑recession levels by the end of the forecast period,” it said.
“Growth is set to rebound this year, but risks to Alberta’s outlook remain elevated. Although some of the trade‑related risks that weighed on global growth in 2019 have eased, there are ongoing concerns about the global economy and the impact of a novel coronavirus (COVID‑19) and geopolitical tensions. Progress has been made on pipeline approvals, but regulatory and political challenges continue to hamper the development of Alberta’s energy resources. These pose risks, not only for Alberta’s investment climate and overall economic growth, but for Canada’s as well.”
