Recession a risk, but not inevitable
Forecasts are pointing to slower growth but not outright recession
By Rob Roach, ATB Economics 28 June 2022 1 min read
Generally speaking, a recession is when an economy stops growing and starts shrinking for an extended period of time.
Here in Alberta, recessions have been an all-too-familiar phenomenon in recent years. Our economy contracted on an annual basis four times between 2015 and 2021.
Despite the ongoing pandemic, our economy started to recover last year and, if current forecasts hold, 2022 will be the year we finally pass the level of economic activity we achieved in 2014.
As a result, we get anxious when we see headlines proclaiming that a recession is “looming.”
While the risk of a recession is real, and much higher than it was at the start of the year, many economic forecasts (including ATB’s) are not projecting a recession at the global level, in the US or in Canada in the next two years.
With that said, they are pointing to significantly slower growth.
The World Bank’s latest estimate is for the global economy to grow by 2.9% in 2022 rather than the 4.1% it was anticipating in January. A new report from the International Monetary Fund says the US economy will avoid recession, but will still slow in 2022 and 2023. TD Bank’s most recent forecast is for growth to continue in Canada, but notes that the economy is close to “stall speed.”
Alberta is an outlier in this regard. While we are dealing with high inflation and rising interest rates like everywhere else, our economy is getting a boost from elevated commodity prices and, barring something unforeseen, should post strong overall numbers in 2022.
This is not meant to suggest that everything is hunky-dory when it comes to Alberta’s economy. The fact that the Alberta economy is doing well overall will, however, help soften the blows landed by higher prices and borrowing costs and create opportunities for enhancing future growth and prosperity in the province.
Answer to the previous trivia question: As of the 2021-22 NHL season, $US 20 million was set aside in the Player Fund. This money is used to pay players a bonus and is distributed based on how far each team gets in the playoffs.
Today’s trivia question: Which province was the last to join Canada?