Alberta economy to improve ever so slightly after tough 2019, according to ATB
The latest economic outloook doesn't anticipate big changes as headwinds continue to blow
Alberta's economy struggled this year and is in for another tough 12 months in 2020, according to the latest outlook from ATB Financial.
It forecasts GDP growth in 2019 was only 0.4 per cent — well below the 20-year average of 2.8 per cent — but cautions final numbers from Statistics Canada have not yet been released.
Those new figures could show the province experienced negative growth this year.
Looking ahead, ATB anticipates a slightly better 2020, with growth of 0.9 per cent leading to a relative boom in 2021, with GDP forecast to grow by 2.1 per cent.
"Bottom line, it's going to be a pretty sluggish year for Alberta's economy," said Todd Hirsch, ATB's chief economist.
"We do expect it to be a modest improvement over 2019, but still likely to feel pretty sluggish, a lot of still discouraging attitudes and feelings in the province simply because growth is not bouncing back up to where most Albertans feel like it's normal."
Pipelines and the ripple
The outlook points to a familiar culprit for the economic doldrums: pipeline capacity and the ripple effects of oil production curtailment and the reluctance of investors to finance additional production and exploration.
ATB says others are predicting a stronger economy in 2020, but it's cautious and says although oil and gas exports are anticipated to rise, it doesn't believe new investment will immediately follow.
Retail sales also struggled in 2019, down in seven of the first nine months, according to ATB.
"It's unlikely that retail sales will improve over the short-term as consumers hold back due to high levels of personal debt, unemployment, and concerns over the general state of the economy," reads the outlook.
It notes that unemployment will continue to be high, forecast to remain at an average of 6.9 per cent next year and 6.7 per cent in 2021.
Employment in construction and oil and gas has dropped, while the "largest absolute increase was in the health care and social assistance sector."
Residential construction did tick up in the latter part of the year, but remains lower than in previous years.
The China factor
Also battering the economy is China and its appetite, or lack thereof, for Alberta crops.
ATB notes there was good news for local producers when China lifted its ban on Canadian meat, but a prohibition on canola continues.
That just happens to be Alberta's largest crop export to China and resulted in a 13.1 per cent decrease in crop exports over the first nine months of the year — a value of $493.5 million.
"Despite the continued challenges posed by insufficient pipeline capacity, Alberta's real GDP is forecast to grow next year," concludes the outlook.
"The easing of oil production limits, modest increases in pipeline capacity, an uptick in natural gas prices, a strong tourism sector, a growing tech sector, improvement in manufacturing sales, and ongoing population growth will help boost real GDP by 0.9 per cent in 2020 followed by growth of 2.1 per cent in 2021."