Drafting through headwinds
Alberta’s economy in 2023 and 2024
By Mark Parsons, ATB Economics 8 June 2023 2 min read
Alberta’s economy is shifting into a lower gear following a blistering performance in 2022.
After topping 5% growth in 2022 (the strongest since 2014), ATB is forecasting the economy will expand by 2.4% in 2023 and 2.2% next year.
The slowdown reflects a softer global backdrop, a pullback in commodity prices, and soaring interest rates.
ATB has revised down its 2023 forecast from 2.6% in March given the wildfires, renewed financial stress, and some softening of commodity prices. For the first time, ATB is also publishing low and high scenarios in recognition of the volatility in Alberta’s economy and the elevated risks.
Last year marked a significant milestone as real GDP finally surpassed the level set in 2014, while also recovering from pre-COVID levels.
Inflation and interest rates are weighing on Alberta households and businesses, but the provincial economy is benefitting from two key factors.
The first is surging population growth. As more people move to the province, they will require housing and a wide range of goods and services—cushioning the impacts of higher interest rates on overall spending in Alberta.
The second is Alberta’s growing energy and agriculture and agri-food sectors. The oil and gas extraction sector is expected to post another year of increased capital spending and production.
In the agriculture and agri-food sector, farmers had a bounce back year in 2022 and are expected to benefit from better-than-average output prices and easing input costs.
And both sectors are bringing on new manufacturing capacity, with expansions in food processing, petrochemicals, hydrogen, and biofuels. Emissions reduction is an area of focus, with renewable energy experiencing high growth and large potential for carbon capture and storage.
The lagging impacts of elevated interest rates are expected to weigh on consumer spending, home construction and be particularly challenging for anyone holding large amounts of debt relative to their income.
Fortunately, increased energy and agri-food activity and record inflows of international and interprovincial migration will help cushion these impacts, making the province one of Canada’s growth leaders.
You can find the full report on the forecast here. More information on the population boom in Alberta can be found in a special report entitled “Foot traffic.” There is also a technical report outlining the forecast’s methodology and the high and low cases.
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