Alberta's recession will end in 2017, Conference Board predicts
Greater oil price stability, fresh hope for new pipelines, should spur recovery
Alberta is poised to emerge from one of the worst recessions in recent history and return to economic growth in 2017, says the Conference Board of Canada.
"It appears that the worst may be over for Alberta, but the road to recovery won't be easy," said Marie-Christine Bernard, who wrote the board's latest provincial outlook, released Thursday.
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Because the price of oil remains depressed, revenues from the energy sector are not expected to increase much in the short term, which will limit Alberta's real GDP growth to a predicted 2.2 per cent in 2017, she said.
"We probably won't see any large, new large greenfield projects in the oilsands. We'll see some investment but nothing like we saw before the oil price collapse and that will weigh on the economy," Bernard said.
Newfound stability in the price of oil will likely stem the decline in capital spending, but a lot of oil remains in storage around the world, which will probably keep the price of West Texas Intermediate from climbing above US $55 in 2017, the report says.
Bernard also notes that the election of Donald Trump in the United States offers new hope for getting more Canadian crude oil to markets, given the president-elect's stated intention of approving the Keystone XL pipeline that was rejected by the Obama administration.
The recent federal approval of the Kinder Morgan Trans Mountain pipeline expansion is also good news for Alberta's energy sector, but the project still has to overcome hurdles and legal challenges before it goes ahead, Bernard notes.
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"Alberta weathered some tough economic times over the last two years and their misfortune deepened as wildfires tore through communities and resulted in temporary shutdowns in the oilpatch," she said.
"The wildfires hindered oil production and exports and also hurt employment throughout the spring and summer.
But economic activity associated with the rebuilding of Fort McMurray will contribute 0.4 percentage points to real GDP growth in 2017, the report predicts.
The Conference Board of Canada is forecasting economic growth for all provinces next year with the exception of Newfoundland and Labrador.