Edmonton's economy is an "island in the storm," says city's chief economist

The city's chief economist is predicting Edmonton will see continued growth in 2016 -- unless the NDP government puts a crimp in the plans due to budget restraint.

But John Rose says he’s ‘very disturbed’ by budget comments made by Alberta’s finance minister

John Rose, the city of Edmonton's chief economist, says the city's construction sector help insulate it from volatile oil prices. (CBC)

The city's chief economist is predicting Edmonton will see continued growth in 2016 — unless the NDP government puts a crimp in the plans due to budget restraint.

Also, John Rose said Wednesday growth could be dampened if oil prices remain depressed, and that leads the province to cut programs and jobs.

"You'd see very negative implications and it would happen very quickly," Rose said.

"With 25 per cent of our employment in post-secondary education, health care and public administration, the one way to generate a recession here in Edmonton is to have the provincial government initiate major cuts."

Rose said he's "very disturbed" by comments made by Alberta Minister of Finance Joe Ceci in the past several days about the possibility of delaying some programs over the next year.

"The ones that haven't been started, they could be delayed or reduced," Ceci told the Canadian Press in a year-end interview.

Edmonton's crane-intensive skyline. Rose says the city's busy construction sector sheltered the local economy from the ongoing downturn.

Rose is also concerned about Ceci's recent commitment to maintain the $6.1 billion provincial deficit forecast for the next year in the budget. Rose said that deficit was predicated on a relatively robust forecast for energy prices.

"I don't know how they're going to hit $6.1 billion, it's probably going to be more like $7-$7.5 billion. If they attempt to keep the deficit at $6.1 (billion), that implies very significant cuts to the provincial budget," he said.

City's economy performing better than other Alberta centres

In a year-end interview with CBC, Rose said he sees modest growth for Edmonton in the coming year, somewhere around one per cent, which is down from the growth of about three per cent the city has seen in the last four years.

"When you compare that to what's happening in the rest of the province, it's very good performance," he said, noting there have been significant job losses in Red Deer, Calgary, and Fort McMurray.

"Going into 2016, Edmonton will continue to be a little bit of an island in the storm as far as the provincial economy is concerned," Rose said.

But that could depend on the Alberta government, he cautioned.

"That is predicated on the provincial government not engaging in major cuts," Rose said. "If we saw cuts.. we could see much weaker growth and perhaps negative growth in Edmonton in 2016."

Construction activity helped Edmonton

Construction helped Edmonton get through 2015 in better shape than the rest of the province, Rose said, pointing to all of the construction cranes in the city's downtown.

Rose said much of that construction activity, and the $8-billion Redwater upgrader project northeast of the city, came at exactly the right time, generating 17,000 construction jobs in the past year.

"Just as we saw a slowdown on the energy and manufacturing side of our economy, we've seen the construction sector really move forward," he said. "That's really provided the floor for employment growth in Edmonton going forward."

 That crane activity downtown will see new office towers opening in the new year. Rose said he expects those new buildings will have no difficulty finding tenants because there's a lot of suppressed demand from the services sector for that office space.

The problem finding tenants may shift to the buildings that will be left vacant as businesses and organizations, including the City of Edmonton, move from older buildings into those new highrises.

"It's going to be, I think, a bit of a struggle for people who own and manage some of the older buildings in the downtown core," Rose said.

One of the buildings that will be vacated is Chancery Hall, where Rose has his office.

"Perhaps they can be repurposed as residential facilities or as on-demand office space, that kind of thing," he suggested.     


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