Alberta economy will shrink 1.1% in 2016 while all other provinces grow, Conference Board of Canada forecasts
Unemployment, already at highest level since 1996, expected to keep rising for first half of the year
Alberta is the only province projected to see its economy shrink in 2016 and the Conference Board of Canada doesn't mince words about what that will mean.
"This year is going to be another tough one for Albertans," the group states in its winter provincial outlook, released Tuesday.
"Alberta is facing another recession this year as cuts in energy investment and job losses hit the economy hard. Until imbalances in global oil markets improve, prospects for a recovery in Alberta's economy are bleak."
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Alberta's economy remains in a "tailspin," according to the report, which projects real GDP to contract by 1.1 per cent this year following an estimated contraction of 2.9 per cent in 2015.
That stands in sharp contrast to the outlook for Canada's other nine provinces, all of which are forecast to see real GDP growth in 2016, with the largest gains expected in British Columbia, Ontario and Manitoba.
Numbers aside, the contrast is apparent in the headlines for each section in the report.
"Stellar Outlook For British Columbia's Economy" reads the bold print above the outlook summary for B.C., which comes just after the section titled: "Another Grim Year For Alberta."
At the root of Alberta's problems is "the rout on crude oil markets" worldwide and the report forecasts oil prices will rebound but only moderately in 2016.
"The lower pricing environment has devastated the earnings of energy companies, with most reporting double-digit declines in their bottom lines in the final quarter of 2015," the report states. "Energy companies are reacting to their squeezed cash flows by planning a second round of capital retrenchment."
Energy investments fell by about $10 billion last year and are projected to fall another $6 billion in 2016, according to the report.
Alberta's unemployment in January stood at 7.4 per cent, the highest mark since 1996, and expected to continue rising through the first half of 2016, "before starting to fall gradually as discouraged workers exit the workforce and inter-provincial migration turns negative."
"One thing that will help the economy is public infrastructure spending," the report notes. "The provincial and federal governments are planning massive infrastructure programs to help stimulate the ailing economy."
The infrastructure spending, along with "sturdy growth in education and health and a modest turnaround in the energy sector," is expected to get Alberta's economy growing again by 2017, with a forecast increase in GDP of 1.9 per cent.
The report cautions, however, that there remains "considerable uncertainty about how long the imbalances in oil markets will persist and whether oil prices could remain depressed for an extended period."