ATB Financial released an updated Alberta Economic Outlook on May 16, with a Gross Domestic Product (GDP) decrease from 2.1 per cent to 0.7 per cent.
Director of Insight Economics and Research Rob Roach said, economists knew going into the year that previously mandated cuts would curtail oil production.
“We’re going to see less expansion in the oil and gas sector, which caused the overall forecast to be reduced,” Roach said.
“What we’ve heard from the oil patch is that things are a little bit more difficult in terms of investment,” Roach said.
Since oil and gas companies don’t have the ability to get the product to market, they are refraining from drilling and expanding.
“That’s worse than we thought,” Roach said.
He added, the delay of the Enbridge Line 3 pipeline replacement has affected the economy significantly, as it was supposed to be functional by the fall of this year but has now been pushed into next year.
Although the oil and gas sector continue to struggle, there are encouraging sectors including agriculture and agrifoods, said ATB’s Chief Economist Todd Hirsch.
“Both should perform well, although canola growers have been hit by a Chinese import ban. Cannabis and other niche crops, however, are creating new opportunities,” Hirsch said.
He added, “Hopefully, a major global slowdown will be avoided and not add to the barriers we face.”
Throughout the duration of 2019, Albertans can expect slow job growth, weak retail growth, decreased global growth, reduced capital investment and drilling rates, and unresolved pipeline challenges.
However, Alberta’s population will continue to grow, and manufacturing sales will perform well across most sub-sectors, the Alberta Economic Outlook said.
Although Alberta’s growth is forecasted to be slow, the economy will continue to grow and is expected to pick up and have increased GDP of over one per cent by 2020.
“It’s not explosive growth,” Roach said.
“What we would like Albertans to take away from the outlook is it’s going to be a tough year. We would like to have better news to report, but we have to be realistic and brace ourselves for a tough year,” Roach said.
The Alberta Economic Outlook can serve as a reminder that there are many Albertan’s who are struggling.
“We are going to continue to grow, still have a pretty good economy, but there is going to be some tough patches for a lot of people on the ground,” Roach said.
The economy could change again over the course of the year. However, currently, the lower investments in the oil and gas sector mean a slower year for the economy.
It depends where Albertans are in the economy, Roach added, as there are many jobs, and a lot of activity.
“As a community, we can help by recognizing that our neighbours are going through a tough time, and trying to help,” Roach said.
