Alberta’s energy sector continues to be the province’s economic driver.
Photograph by: Grant Black , Calgary Herald
CALGARY — Alberta’s economic boom is showing little sign of slowing down, according to the latest RBC Economics Provincial Outlook released Thursday.
RBC forecasts that Alberta will continue to be among the fastest-growing provincial economies in 2013 with a real GDP growth rate of 3.5 per cent, second only to Newfoundland & Labrador’s 4.4 per cent.
Alberta will regain the top spot in the country in 2014 with Real GDP growth forecast at 4.2 per cent.
“Alberta is in the midst of an impressive economic boom, with activity in the province surging by 5.1 per cent in 2011 and remaining on the fast track in 2012,” said Craig Wright, senior vice-president and chief economist with RBC. “While massive investment in the energy sector – which was the key catalyst for the economic boom – has been tempered recently, strong capital expenditures and rapid momentum in other sectors will keep the economy moving ahead at a sustained clip.”
But RBC said the mood in the province remains somewhat cautious, as Alberta’s oil sector finds itself increasingly “land locked” due to pipeline bottlenecks. It said major players in the oilsands have cited delivery challenges and a greater than usual discount on wellhead prices as reasons for delays in spending on mega projects.
RBC said these delays have raised some concerns about the sustainability of business investment in the province and it expects major players in the oilsands to remain generally cautious in 2013, keeping spending in a holding pattern while pipeline issues are addressed and crude oil price relationships normalize.
The report said Alberta will benefit from broad-based expansion in 2013, with strong population growth and employment continuing to fuel consumer spending and housing activity showing continued vigour. On the business side, rising demand for commercial and industrial space will support growth in capital spending outside the energy sector.
Economic growth for this year is estimated at 3.8 per cent, the best in Canada, following 2011’s 5.1 per cent which also set the pace for the rest of the country.
“We anticipate that Alberta’s growth will slow modestly next year thanks in large part to the lull in oilsands investment,” added Wright. “However, sufficient progress in resolving these oil delivery issues in 2014 should allow for major projects to proceed, setting the stage for a 4.2 per cent re-acceleration in growth.”
The Canadian economy is forecast to grow by 2.4 per cent in 2013 and 2.8 per cent in 2014 after an estimated 2.0 per cent growth this year.
In its quarter economic forecast released Thursday, TD Economics said Canadian economic growth is expected to edge down to 1.7 per cent in 2013, before picking up to a healthier 2.5 per cent in 2014.
“In Canada, the first half of 2013 is shaping up to be quite soft. Fiscal consolidation in the U.S. alone could shave 0.5 percentage points off Canadian economic growth through lower exports and the knock-on-effects to other areas of the economy,” said TD. “Beyond mid-year, the rebound in the U.S. should help support a modest recovery in Canadian export growth.
“However, the Canadian economy will still face headwinds from a high Canadian dollar, elevated household debt and government restraint.”