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ATB’s Economic Outlook pegs Alberta’s GDP growth at 0.8 per cent

ATB’s Economic Outlook pegs Alberta’s GDP growth at 0.8 per cent

Posted on: 9/10/2019 | Author: ATB Economics

With a sluggish oil and gas sector dampening job creation, consumer spending and construction activity, ATB Financial is forecasting 0.8 per cent real GDP growth for Alberta in 2019 in its latest Alberta Economic Outlook.

If the Line 3 oil pipeline that was scheduled to be in service this fall is moving oil a year from now, Alberta’s economy is forecast to grow by 2.0 per cent in 2020. Risks in 2020 that could reduce growth in Alberta include a slowing global and/or U.S. economy, ongoing trade disputes, weak oil prices, more bad news regarding the Trans Mountain pipeline and Keystone XL oil pipeline projects, and the possibility that the United States-Mexico-Canada Agreement will not be ratified by the U.S. Congress.

The main factor keeping growth low in Alberta at the moment is insufficient oil transportation capacity. The system reached its limits last year and prices for Alberta crude collapsed. Production cuts mandated by the province shored up prices, but until investors are convinced that new transportation capacity will come online, capital investment will remain lower than it could be.

At the same time, the natural gas industry has been faced with low prices and its own egress challenges. The daily spot price of Alberta natural gas at the AECO Hub has even closed below zero on more than one occasion.

Tepid job creation has kept Alberta’s unemployment rate above the national average. Alberta’s unemployment rate over the first eight months of the year was 6.9 per cent compared to 5.7 per cent for the country as a whole. The provincial unemployment rate is expected to remain high next year as well, dropping slightly to around 6.6 per cent.

On the bright side, despite these challenges, the Alberta economy is forecast to grow this year. Barring a global economic crash and assuming more oil can get to market, should post stronger numbers in 2020.

GDP growth September 2019, graph​​​​

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