Alberta’s economy faces significant headwinds in 2019, according to the latest forecast from the Alberta Treasury Branch.
The financial institution projects a mere 0.7 per cent growth in real gross domestic product (GDP) for 2019, down from 1.4 per cent in its March economic outlook.
“It’s going to be a slow year for economic growth in the province,” Rob Roach, ATB’s director of insight, told Global News Morning Calgary.
“On the bright side, it is still on the positive side. So we are expecting some growth this year, just not a lot.”
ATB points to the province’s oil and gas sector — representing over 25 per cent of the Alberta’s real GDP — as a key factor in the gloomy economic outlook. Pipeline capacity, including projects like Line 3 replacement, Keystone XL and the Trans Mountain Expansion, is throttling sector activity and investor confidence.
“Until that pipeline issue gets resolved and we get more capacity, it’s really constraining the growth of the oil sector,” Roach said Thursday. “It’s also an issue for natural gas pipeline constraints.
“As long as that’s in place, the sector can’t really grow, and that keeps our economic growth overall from expanding.”
Recent employment numbers from Statistics Canada showed Alberta gaining 21,000 jobs in April. But the ATB economics and research team director does not have confidence in the province’s job trends.
“Unfortunately, the longer-term trend — it’s just not keeping up with with population growth,” Roach said. “So we still have very high unemployment in Alberta relative to what we’re used to.”
“Hopefully we won’t see it slip into negative where we actually lose jobs but that could happen if drilling rates are down. And if the economy is slow enough, we might see some job losses overall.”
It’s not all doom and gloom in the ATB economic outlook.
“Overall, agriculture and food processing, manufacturing in general — those are a couple of bright spots that should do relatively well in 2019,” Roach said. “The digital economy, high tech and tourism as well — those are some areas where things should roll along pretty well in 2019.”
ATB expects an alleviation in pipeline issues should help Alberta’s economy grow in 2020, with real GDP increasing by 1.6 per cent.
In a report released Tuesday, the City of Calgary’s economic outlook expected the southern Alberta city’s GDP to outpace the province, growing by 1.9 per cent in 2019.