Alberta is headed for a second consecutive year of economic contraction, according to ATB Financial's latest outlook, released Thursday morning.

The province's economy shrunk by one per cent in 2015, according to the report, and a smaller contraction of 0.5 per cent is now forecast for 2016.

That's quite a change from its previous forecast — issued just three months earlier — in which ATB was projecting economic growth of 1.4 per cent for Alberta in 2016.

The new report blames the gloomier outlook on 12-year lows in the price of oil and the expectation that those prices won't "recover appreciably for some time."

"This low price environment continues to discourage new investment and spending, and has weighed down employment — not only in the oil patch, but throughout most sectors of the province," the report reads.

It adds that unemployment in Alberta is forecast to rise as high as 7.5 per cent by spring or summer but is "less likely to rise above eight or nine per cent."

The outlook does say that other major industries in Alberta, such as agriculture, forestry and tourism, should continue to perform well this year.