Is Alberta well-positioned to handle the transitioning economy?
ATB’s Deputy Chief Economist & Managing Director Rob Roach shares the good news and the not so good news post Calgary Economic Outlook event.
By Rob Roach 28 October 2022 3 min read
I recently had the pleasure of presenting at the Calgary Economic Development’s 2023 Economic Outlook event. There was a tremendous amount of positive energy in the room regarding the economic future of Alberta combined with a clear awareness of the many challenges we face.
My presentation outlined the top 10 things we need to know about the provincial economy as we head into 2023 and beyond.
Here’s a quick summary:
10. Alberta has a very strong economy: There are a lot of fantastic things going on in Alberta and we have a long list of advantages. This is important to stress because there is no shortage of hurdles ahead and we don’t want to fall into the trap of negative thinking.
9. The invasion of Ukraine: The invasion is a major drag on the global economy and we don't know when, or how, it will end.
8. Inflation: Even if things go according to plan (see #7), it will likely take until 2024 before the national inflation rate returns to the Bank of Canada’s target of 2%.
7. Interest rates: Central banks around the world have been raising interest rates with more increases on the horizon. This is a case of no pain, no gain: tighter monetary policy is expected to reduce inflation (the gain) but it does this by dampening economic activity (the pain).
6. Same water, different boats: Albertans are facing the same rough economic waters brought on by the three I’s of invasion, inflation and interest, but we are in a somewhat better boat because of the boost our economy is getting from elevated commodity prices.
5. The aging of the population: We’ve known about this for decades, but we are still not fully prepared for the opportunities and challenges the aging of our population has, and will, generate.
4. The tech transition: Alberta has been making headway with regard to growing our tech sector, but we also need to adapt as new technology changes the game for employees, employers, consumers and educators.
3. The energy transition: Alberta’s oil and gas industry remains a critically important driver of our economy, but limits have been placed on its future growth and efforts to reduce carbon emissions could even see it lose ground over time. With that said, opportunities are also being created that Alberta has been seizing.
2. The labour transition: The aging of the population and the tech transition are creating labour shortages. At the same time, workers are seeking different relationships with their employers. This will require getting better at everything from foreign credential recognition and on-the-job training to formal education and flexible work arrangements.
1. Eroding trust: For our economy to function well, we need to trust each other. Whatever the reasons, trust seems to be eroding. How to fix this is a complex question, but it’s clear that both our economy and society will suffer if we don’t.
Is Alberta well-positioned to handle the transitioning economy? Yes! (Here comes the dreaded) but, we don’t have a minute to rest.
Think of Alberta’s economy as an elite hockey team. We are highly competitive, we have oodles of talented players and we have been working hard. We’ve been through some tough seasons recently, but we are scoring more goals and winning more games in the form of attracting new businesses and expanding existing ones.
But it’s a long season and we still need to make the playoffs. Then we need to do it all over again next season and so on. The pursuit of economic success, in other words, doesn’t end after a goal is scored; it requires ongoing effort to achieve. We have the economic chops here in Alberta, but there is still a lot of hockey to play.