Alberta to face its 'worst contraction' ever, ATB chief economist warns
Todd Hirsch says it's hard to be optimistic for a quick rebound right now
The COVID-19 pandemic and its related economic fallout is poised to change Alberta's economy permanently, says ATB chief economist Todd Hirsch.
"This pandemic and this economic fallout will permanently reshape our economy," Hirsch said during a webinar hosted Thursday by the Calgary Chamber of Commerce.
"I've had a hard time in the last couple of weeks being an optimist on this. I do think this is something very serious for our economy … I do expect this to be the worst contraction Alberta has ever seen."
Hirsch acknowledged there are many unknowns in the coming months. There are questions surrounding how long physical distancing will last and how long it will take for global oil demand to return.
He said Alberta's energy sector is being hit extra hard, and entered the intensifying stages of this pandemic "already in a compromised position."
Hirsch said he's "not as convinced" oil demand will be back up by the end of this year, citing concerns with transporting oil.
"To be honest, I'm not really that optimistic in a quick rebound for this city," he said.
As a result, a potential recession could be on par with or as bad as the Great Depression, Hirsch said.
His views on the economy echo Premier Jason Kenney's statement last month that Alberta's oil and gas industry is "on life support."
Though the global economy could recover from the COVID-19 pandemic this summer, Kenney said Alberta's finances could suffer if an oil price war between Russia and Saudi Arabia drags on.
While Hirsch acknowledged the present moment's downsides, he pointed out potential innovation and positive change during the pandemic.
He said the downturn could encourage a higher value being placed on information and communication technology or a growing demand for locally-produced food products.
Or perhaps the pandemic will help in developing innovative healthcare technology or an increase in innovation around clean technology.
"To me, success will be that we do take this opportunity to purposefully diversify our economy," Hirsch said.
"This does not mean that we abandon or move away from our hydrocarbon economy … that will remain a backbone, but that backbone is not in good shape at the moment."
With files from Janet French