Todd Hirsch, ATB Financial chief economist (rdnewsNOW file photo)

By Troy Gillard

Marathon not a sprint

Alberta economy will need years to recover: ATB Financial

Oct 8, 2020 | 10:44 AM

ATB Financial’s newest Alberta Economic Outlook shows the province’s real GDP will grow by approximately 3.3 per cent in 2021 but it will take some time before the economy catches up to where it was before the global pandemic.

Although economic activity has risen since the spring lockdown, ATB Financial says Alberta’s economy will be about 7 per cent smaller in 2020 than it was last year.

Given that Alberta went into the COVID-19 pandemic with a weakened economy, ATB is forecasting it will likely take until 2023 for Alberta’s annual GDP to surpass where it was in 2019.

“We are still living in a time of uncertainty,” said Todd Hirsch, vice president and chief economist for ATB Financial. “If a second wave leads to another lockdown, we will see the economy fall even lower this year. Alternatively, if we get an effective vaccine soon, we could see growth accelerate.”

While oil prices have rebounded since they dove into negative territory during the height of the first wave, both prices and global demand for oil remain soft with the price of a barrel of West Texas Intermediate potentially staying below $US 50 for the next two years. Oil and gas capital spending in Alberta is also forecast to remain low next year—even if global oil demand recovers—which will continue to adversely affect Alberta jobs and businesses.

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Conversely, the agriculture sector has performed relatively well as ATB Financial says beef prices have improved and processing plants are now producing above normal levels to address the backlog. Food manufacturing sales are also up, outperforming the overall manufacturing sector.

“We have seen everything from retail sales, job numbers and manufacturing improve since economic activity resumed,” said Hirsch. “Still, it will be a long time before we catch up to where we were pre-pandemic. In that sense, Alberta’s economic recovery will be more of a marathon than a sprint.”

The complete ATB Financial Economic Outlook can be read here.