Elevated inflation and interest rates continue to weigh on the economy
ATB Financial's forecast for Alberta's economy in 2023
By ATB Financial 30 November 2022 2 min read
Calgary — Globally, many countries are anticipating a recession due to high inflation, rising interest rates, slower global growth, geopolitical strife and the lingering pandemic. Inflation and interest rates continue to weigh on Alberta as it faces the same challenges as the rest of the world. But the province is economically well positioned and will forge ahead as a result of its natural resource industries and growing population. ATB Financial’s economic outlook for Alberta expects real GDP growth of 2.8% in 2023.
"While Alberta is not experiencing a boom, the positive prospects for our oil and gas sector are providing a significant boost that will continue into 2023," says Rob Roach, Deputy Chief Economist at ATB Financial.
As outlined in ATB’s latest economic forecast, three key factors will influence the direction of Alberta’s economy in 2023:
Energy market activity robust in Alberta
Oil production in Alberta this past September reached its highest level in the province’s history with average production at 3.9 million barrels per day. Even with an outsized differential and recent price erosion, oil prices are high enough that companies have increased their capital spending plans.
Inflation at an inflection point
The rising cost of living is affecting Canadians across the board. The Canadian headline inflation rate in October continues to be elevated at 6.9%, but down from the 8.1% peak reached in June 2022. It will take time, but there are signs that price growth is slowing and will get within sight of the 2.0% target by 2024. Interest rates are expected to rise over 4.0% and stay there throughout next year.
Strong migration of people to the province
Alberta’s favourable economic conditions have helped attract the largest number of interprovincial migrants of any other province between Q2 2021 and Q2 2022. On a net basis, the province added nearly 60,000 people from other countries in 2022, the highest number on record. This has played a key role in boosting residential activity.
Strong migration levels are also expected to improve Alberta’s labour market and alleviate some of the staffing challenges. Overall, the forecast expects Alberta’s unemployment rate to average 5.8% this year and remain around this level in 2023 and 2024.
"Alberta will likely lead the country in growth next year, but Albertans will still feel the negative impact of sticky inflation, higher interest rates and geopolitical uncertainty," adds Roach.
About ATB Financial
With $59.1 billion in assets, ATB Financial is an Alberta-built financial institution that is a catalyst for economic growth in our province. We got started in 1938 to help Albertans through tough economic times. Today, ATB Financial’s more than 5,000 team members love to deliver exceptional experiences to over 800,000 clients through our many branches and agencies, our 24-hour Client Care Centre, four entrepreneur centres, and our digital banking options. ATB powers possibilities for our clients, Alberta and beyond.
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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.