In this week’s The Seven…

• Leave the snow tires on - ATB’s quarterly Alberta Economic Outlook
• MOUving forward - Canada and Alberta to cooperate on methane
• Measuring up - Canada’s economic performance relative to the U.S.
• Fill ‘er up - Trans Mountain pipeline reaching capacity
• A big (tech) deal - Calgary firm sold for US$4.75B
• Interesting Fact - Asian natural gas prices
• Chart of the Week - Alberta’s annual economic growth

“When you're [forecasters] in a dangerous time”

—(A slightly modified) “Lovers in a Dangerous Time” by Bruce Cockburn 

References to pop songs aside, we take economic forecasting very seriously at ATB Economics. We want to provide the best and most helpful information we can. We do this knowing things can change quickly and render the forecast out of date—sometimes even before we’ve had a chance to release it! 

Skeptics ask: What’s the point if it’s all going to change? It’s a good question.

Here’s the thing: Even when conditions evolve and forecasts are wrong (some would say “even more wrong”), they perform a very useful service. Think of a sea captain who carefully considers information about their ship’s position, bearing, speed, and so forth to estimate where and when it will make landfall. Then a storm hits that knocks the ship off course. The captain’s forecast is now wrong, but it sure comes in handy when trying to figure out where the ship has ended up and what’s needed to get it back on course.

In a similar way, economic forecasts provide a baseline for understanding what actually happens and how the course we thought we were on has been affected. Being “right” is not really the point (though it’s great when you are). The point is to go into the unknown with as much useful information as you can, rather than just closing your eyes and hoping for the best.

Leave the snow tires on: The road ahead for Alberta’s economy

With the above in mind, we published our latest Alberta Economic Outlook yesterday. From a flourishing tech sector and ongoing population growth to record oil production and strong tourism numbers, there are a lot of good things happening in Alberta that are driving the economy forward. As such, we expect Alberta’s economy to grow by a solid 2.7% this year.

But, like everywhere else, the province is dealing with the negative impacts of the Iran war, U.S. tariffs, the elevated level of uncertainty to which both are contributing, and the hangover from the recent period of high inflation and rising policy interest rates.

With regard to the latter, inflation has returned to its target range and the Bank of Canada has cut its policy interest rate from 5% to 2.25%. Still, many households remain financially stressed, and the Iran war has already led to higher prices at the pumps.

While high oil prices boost Alberta’s government and producer revenues, broader economic growth is stalled by uncertainty over future pipeline capacity. Furthermore, these price spikes (which many analysts feel could get much worse) fuel global inflation, risking a worldwide economic downturn.

And then there’s U.S. trade policy. At this time last year, U.S. tariffs were expected to set off a global recession (the massive “Liberation Day” tariffs were announced on April 2, 2025). Thankfully, the U.S. backed off on the worst threats and, while far from optimal, the tariff situation has become a headwind to growth rather than a brick wall.

For Canada, the key development on this front happened well before Liberation Day and the de-escalation that followed. On March 6, 2025, the United States announced it would exempt Canadian goods qualifying for preferential treatment under the Canada-United States-Mexico Agreement (CUSMA) from the 25% tariff imposed a few days earlier on March 4. This exemption has kept the average U.S. tariff rate on Canada relatively low, which is why it is critical that the exemption is maintained whatever happens with the CUSMA review taking place this summer.

Putting all this together, the drivers of growth in Alberta are strong enough to keep the economy growing at a good pace, but the risks of a slowdown are higher than usual.  

MOUving forward: Canada and Alberta reach preliminary agreement on methane

In other news, as we get closer to the deadlines embedded in the Canada-Alberta pipeline MOU, a positive step forward has just been announced. The provincial and federal governments have reached an agreement-in-principle to develop an outcome-based equivalency agreement aimed at reducing methane emissions by 75% from 2014 levels by 2035. The idea is that Alberta will implement its own performance-based framework while overlapping federal methane rules are stood down. What’s next? The goal is to publish a draft equivalency agreement for a 60-day public comment period with the objective of concluding a final agreement by the end of 2026.

Measuring up: How Canadian economic performance compares to the U.S.

Comparing yourself to how others are doing can be both useful and tricky. It’s useful because it gives you something to measure yourself against and potentially strive toward. It can be tricky because the grass on the other side is not always as green as it seems, the comparison may not be entirely fair, and you may have different priorities.

This is certainly the case when it comes to comparing Canada’s economic performance to our southern neighbour, but Statistics Canada gives it a go in a new report with the accurate but prosaic title of Measuring Canada’s economic performance relative to the United States.

When it comes to evaluating economic performance, the report uses three popular measures: labour productivity; real gross domestic product (GDP) per capita; and real gross national income (GNI) per capita.

• Labour productivity tracks how efficiently work is turned into goods and services and is seen as a primary driver of higher living standards.
• Real GDP per capita measures the average income generated per person from domestic production.
• Real GNI per capita includes both domestic and foreign income.

Canada is falling behind the U.S. across all three metrics (see the graph below). As for why, the report identifies Canada’s relatively weak productivity growth and links that to a heavier reliance on small businesses and lower investment in information and communications technology and intangible assets (e.g., “ideas, stories, models, data, designs and embodied knowledge of how systems work”).

It took the spectre of U.S. tariffs to get the conversation going, but a lot more Canadians are finally talking seriously about how to address what Bank of Canada Senior Deputy Governor Carolyn Rogers called the country’s productivity emergency. Ideas being bandied about include reducing interprovincial economic barriers; increasing international exports; finding a way to get major projects built, and reducing barriers to investment embedded in regulations and the tax system.  

Answer to the previous trivia question: The trade deal between Canada and China that went into effect on March 1, 2026 reduced the tariff on Canadian canola seed to 15%.

Today’s trivia question: What is the average expected cash payout to CoolIT employees following the company’s sale to Ecolab?