Ahead of the crowd: Alberta’s economy heading into 2024
By ATB Financial 19 September 2023 2 min read
Edmonton — In the past year, Alberta’s economy has weathered the inflation storm better than most. Strong population growth and a revitalised energy sector will continue to put Alberta's economy ahead of the crowd even as it slows in the face of higher interest rates.
Consumer spending, employment and population growth have been stronger than expected in our previous outlook. Our forecast is for real GDP growth in Alberta of 2.7% in 2023, up from 2.4% in June. However, with interest rates now looking to be “higher for longer” we have lowered our growth forecast for 2024 to 2.0% from 2.2%.
"Alberta's economy has weathered formidable storms, including the tumultuous oil price crash of 2014-15, market access hurdles in 2019, and the unprecedented challenges of the 2020 pandemic. The province's economy has recovered and is now firmly in expansion mode," said ATB Financial’s Chief Economist, Mark Parsons.
As we approach the final months of the year, ATB’s latest economic forecast examines the pivotal factors affecting our economy. Given heightened uncertainty, this edition of the outlook incorporates high and low scenarios.
Population growth surges
Alberta is experiencing record levels of net international migration and near-record gains from interprovincial migration. Over 200,000 residents have been added to our population since last summer - the highest on record. ATB has revised its 2023 population growth forecast to 4.5%, marking the highest rate since 1981. Population growth is expected to moderate next year, but remain relatively strong and continue to support consumer spending and housing demand while increasing the labour supply.
Energy sector comeback
Alberta’s largest sector has experienced a remarkable turnaround from the COVID lows. Rising energy investment and production is a major factor driving Alberta’s real GDP growth ahead of the national average this year and next. Other growth areas over the medium term include aviation, tourism, technology, food manufacturing, biofuels, petrochemicals, hydrogen, and investments in emissions reduction.
Wounded from the inflation fight, but not down
The Bank of Canada’s 4.75 point increase in interest rates since March 2022 is one of the most aggressive hiking cycles since the 1990s. Although we expect the Bank will take a pause for the remainder of this year and start lowering rates next year, more significant impacts will likely be felt in 2024.
Alberta's economy has been on a faster track, although it hasn't been without its share of bumps along the way. Economic activity has been disrupted by wildfires in May and June, while strikes at the West Coast ports in July hampered trade with Asia. The agriculture sector has faced tougher conditions due to significantly drier-than-normal weather in certain regions.
"Alberta’s economy has been resilient, and expected to outperform this year and next thanks mainly to rapid population growth and a rebounding energy sector. With headwinds building, we expect growth to slow next year, before picking up again in 2025," added Parsons.
About ATB Financial
With $58.3 billion in assets, ATB Financial is a leading financial institution that started in Alberta with the focus of putting people first. Our success comes from our more than 5,000 team members who love to deliver exceptional experiences to over 800,000 clients across our Personal and Business Banking, ATB Wealth Management and ATB Capital Markets businesses. ATB provides expert advice, services and products through our many branches and agencies, our 24-hour Client Care Centre, four entrepreneur centres and our digital banking options.
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ATB Financial’s Economic Outlook is intended for general information and educational purposes only and should not be considered specific legal, financial, tax or other professional advice or recommendations. Information presented is believed to be reliable and up-to-date but it is not guaranteed to be accurate or a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the authors as of the date of publication and are subject to change. The actual outcome may be materially different. ATB Financial and any of its affiliates are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by ATB Financial or any of its affiliates and related entities.