Alberta slipped into recession last year
Unfortunately, GDP numbers released by Statistics Canada indicate that the Alberta economy shrank by 0.6 per cent in 2019
By ATB Economics 2 July 2020 1 min read
We knew it was going to be close, but we were hopeful that Alberta’s economy would expand by at least a little bit last year. Unfortunately, GDP numbers released by Statistics Canada yesterday indicate that our economy shrank by 0.6 per cent in 2019 after posting growth of 1.9 per cent in 2018. Total output fell $2.1 billion from 336.3 billion to $334.2 billion.
The average growth rate for the country as a whole was 1.7 per cent. Only Alberta, Saskatchewan (-0.8 per cent) and the Northwest Territories (-8.8 per cent) experienced a contraction last year. Prince Edward Island led the country with a growth rate of 4.5 per cent.
Alberta’s growth was stymied by a lack of oil pipeline capacity. The oil transportation bottleneck and uncertainty around its resolution kept a lid on the sector’s capital spending and helped precipitate an oil price crash at the end of 2018 that prompted the province to curtail oil production.
While the GDP generated by oil and gas extraction managed to increase by a modest 0.6 per cent ($481 million), the oil and gas drilling and field services sector’s output plummeted by 22.2 per cent ($2.7 billion).
Other major sectors that contracted include construction (-7.2 per cent), manufacturing (-3.2 per cent), and retail (-1.2 per cent).
Major sectors that posted gains include real estate (+1.9 per cent), finance and insurance (+2.4 per cent), health care (+3.0 per cent), and agriculture and agri-food (+4.6 per cent).
Before the pandemic, Alberta’s economy was expected to gain some steam this year as progress was made on pipelines, sectors such as tech, agri-food and tourism continued to do well and as our population grew. But, even with the economy reopening, the impact of COVID-19 is such that our GDP in 2020 will end up well below where it was in 2019.