An Alberta financial institution is projecting that the provincial economy could be in a better position by 2023 than it was before the COVID-19 pandemic hit.
ATB Financial released its latest economic outlook for Alberta on Thursday. The financial service provider said it forecasts the province’s real GDP will grow by approximately 4.1 per cent this year and then by 2.6 per cent in 2022.
However, the outlook notes that growth hinges on two significant expectations: “that Canada will be through the worst of the pandemic by the fall and that global demand for oil will continue to grow with OPEC limits on supply.”
Watch below: (From Feb. 22, 2021) Alberta’s oil output has risen to pre-pandemic levels and revenues are on the rebound, one economist says. As Tom Vernon explains, with the price of a barrel higher than what was projected in last year’s budget — Alberta is in a little better shape than expected.
ATB Financial’s vice-president and chief economist also noted the recovery won’t be the same for everyone.
“It’s unclear how many jobs lost during the pandemic will return,” Todd Hirsch said in a news release.
“Although we are forecasting employment growth of almost 4 per cent, we anticipate Alberta’s jobless rate will remain relatively high throughout this year, hovering around 10 per cent.”
Alberta’s unemployment rate has been on somewhat of a downward trend lately. Last month it dropped 0.8 percentage points to 9.9 per cent, the lowest it has been since March 2020.
In its latest outlook, ATB Financial says it is projecting the provincial economy will experience “a K-shaped recovery.”
“Higher-income earners who didn’t lose their jobs on the upper branch will return to normal and drive consumer spending,” the financial institution said.
“At the same time, low-income earners on the lower branch may face chronic unemployment because they don’t have jobs to go back to and emergency government relief programs are winding down.”
ATB Financial said it expects capital spending within the fossil fuel sector will “still be down compared to 2019 — which was already a slow year.”
But ATB said the oil sector has been buoyed by a rise in prices and noted oil production returned to pre-pandemic levels late last year. The financial institution said it is forecasting oil prices for 2021 to be at US$51 per barrel.
ATB’s outlook notes that retail spending fared reasonably well in Alberta in 2020.
“If motor vehicles and gas stations are excluded, it increased by 2.7 per cent,” the report says.
“Household savings accumulated during the pandemic should boost retail sales in 2021 but some of this will be offset by the end of emergency income support and ongoing unemployment.”
ATB’s outlook notes that while housing starts and residential building permits were up in January, it expects growth to be limited in that sector at least in the short term because of “weak population” growth and a prolonged road to economic recovery for the province.
“As Alberta’s economy recovers, there are a number of bright spots to watch, including our growing tech sector which has attracted investment from several big companies,” Hirsch said. “Our province’s agriculture and agri-food sector also continues to perform well with the cattle industry rebounding quickly from pandemic-related challenges.
“There are a lot of reasons to be optimistic about Alberta’s economy in the long run.”
–With a file from Global News’ Melissa Gilligan
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