Alberta’s economic outlook - a speed bump in the faster lane
ATB’s latest economic forecast outlines the current factors influencing the Alberta economy
By Mark Parsons, ATB Economics 12 December 2023 2 min read
In 2023, the primary economic concern revolved around rising interest rates aimed at reducing inflation. As we shift our focus to the upcoming year, a new theme emerges: 'the wait’. ATB’s latest forecast suggests that the Bank of Canada will continue its 'pause, wait and see' stance before lowering its policy rate.
As Tom Petty famously sang, 'the waiting is the hardest part.' This sentiment resonates as the delayed effects of increased borrowing costs are set to impact more households and businesses in the coming year. Based on current trends, we forecast that the Bank of Canada will initiate cuts around the middle of next year.
We expect the Alberta economy to slow to 2.1% real GDP growth in 2024 and pick up again to 2.7% in 2025.
Key factors influencing the Alberta economy include:
Energy sector revitalised - Although oil and gas investment remains well below its historical peaks, there is an upward trend. The energy sector has exhibited a resurgence post pandemic, and this positive momentum is expected to persist into the coming year as market access improves and prices remain healthy.
Population growth surges - Alberta experienced a population surge of 4.1% from July 2022 to July 2023, marking the fastest growth rate among all provinces and the highest rate of increase since 1981. This growth is multifaceted, driven by factors such as immigration, non-permanent residents, interprovincial migration, and natural increases. While population growth will moderate, it will remain strong. This sustained growth is anticipated to bolster consumer spending, stimulate housing demand, and contribute to an expanded labour supply.
Emerging sectors - There are more signs of diversification within the broader energy sector including biofuels, petrochemicals and hydrogen. Other growth sectors include food manufacturing, tourism, aviation and technology.
Speed bump ahead - Despite being in the faster economic lane, Alberta's growth has been challenged by the speed bump created by higher interest rates. Other disruptions in the past year include the wildfires in May and June, the strikes at the B.C. ports in July and drier-than-normal conditions experienced by farmers in the southern and central eastern regions.
In 2024, Alberta is expected to remain a growth leader in Canada despite the challenges of higher financing costs and loan resets. While households and businesses will feel the impacts, Alberta enters the year in relatively good shape.
Answer to the previous trivia question: Alberta imported the most goods and services in 2020* from Ontario. (*2020 is the most current year for which interprovincial trade data by province of origin and destination are available.)
Today’s trivia question: The first transatlantic radio signal was sent on December 12, 1901 by Guglielmo Marconi. The signal was sent from England to where?