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But province will lead country: Western think-tankAlberta's economy cools slightlyAfter spending the past few years in the fast lane, Alberta's economy let up on the gas last year and recorded a slower rate of economic growth. LINDA WHITE -- Special to the Toronto Sun |
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But it remains firmly in the driver's seat and is expected to retain its headline-making status as one of Canada's top performing provincial economies.
It also continues to hold the top spot on employment growth. That's according to Canada West Foundation's Alberta Economic Forecast and Profile, released in June. It predicts the so-called "Texas of Canada" will experience a rate of economic growth that is slightly higher than Canada's average rate of growth for the past five years.
A western think-tank is taking the downturn in stride. "With indicators such as employment growth slowing and housing starts down, Albertans may be concerned about a shift in the economy," says Dr. Roger Gibbins, president and CEO of Canada West Foundation, a public policy research group based in Calgary.
"However, consumers are still spending money and jobs are still being created in the province. Albertans can rest assured that although times seem to be slowing down, the province is still moving forward."
Highlights of its economic forecast include:
Employment growth has slowed but hasn't stalled. Alberta continues to lead the country in job creation.
Activity in the conventional oil and gas sector is down considerably compared to previous years, but business investment related to the oil sands remains an important driver of the provincial economy.
With the price of oil climbing above $130US per barrel and natural gas also on the rise, energy prices support continued economic growth.
Alberta has been the apple of Canada's eye for several years, thanks to a considerable gap between its economic performance and that of the national economy.
In 2004 and 2005, for example, Alberta's real economic growth was above 5%. That's more than two percentage points higher than national figures. The gap turned into a chasm in 2006, when Alberta's real economic growth hit 6.6%. This was about three times higher than the rest of Canada.
According to the latest Scotiabank Group Provincial Forecast Update, Alberta's economic growth is expected to outpace the rest of Canada's growth with a real GDP growth of 2.9% in 2009. In 2008, Alberta's economic growth is expected to be tied with Manitoba's at 2.5% and second to Saskatchewan's 3.0% growth.
Certainly, some sectors of Alberta's economy have cooled. The total value of building permits was relatively flat from 1998 to 2004 compared to the past three years, when they more than doubled. Roughly half of the increase from 2004 to 2007 was due to residential construction, Canada West Foundation reports.
The value of building permits started to retreat in the middle of 2007. In the first quarter of this year, total building permits declined for the third consecutive quarter, largely due to the residential side. Residential building permits dropped 18.7% in the closing quarter of 2007 and 8.0% in the first quarter of this year.
The future isn't entirely certain. National and global economic uncertainties include a struggling U.S. economy, which gobbles up almost 89% of Alberta's exports. Labour shortages and cost pressures -- perennial concerns in Alberta -- could also reduce economic growth.
But the Canada West Foundation is forecasting real GDP growth of 3.1% for the province in 2008 and 3.2% for 2009.
linda.white@rogers.com
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