ATB economist Siddartha Bhattacharya speaks at Red Deer & District Chamber of Commerce Luncheon on Tuesday at the Holiday Inn & Suites. (rdnewsNOW/Alessia Proietti)

By Alessia Proietti

Wildfires may have economic impact

Alberta economy expected to slow but remain in better position than rest of Canada; says ATB

May 17, 2023 | 11:51 AM

The province of Alberta is expected to slow but remain in a better economic position compared to other parts of the country over the next two years, according to ATB Financial.

The Red Deer & District Chamber of Commerce held their Key Speakers Series Luncheon on Tuesday at the Holiday Inn & Suites in Gasoline Alley (33 Petrolia Dr) where ATB economist Siddartha Bhattacharya gave a provincial economic outlook.

“The main thing is to understand is what’s keeping our economy from the weaknesses being shown elsewhere in the county,” he said. “Alberta remains in a better position compared to other provinces just due to our strengths in the commodity based market, due to agriculture and energy producers. We should fare better than the other places.”

OIL & AGRICULTURE

He spoke about how the oil and agricultural industries remain strong forces in the province.

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While oil prices have tempered in 2023 to roughly $70 CAD a barrel compared to the $95 in 2022, Bhattacharya says bullish factors will keep prices from decreasing like the reopening of the Chinese market following removal of pandemic-related measures and a booming travel season ahead.

Last year, Alberta’s oil production surpassed their 2021 record with 3.7 million barrels per day and he says output levels are expected to remain as robust. He says with the completion of the Trans Mountain pipeline expansion estimated by the end of the year, an additional 500,000-600,000 barrels could be produced per day.

Agriculturally, Bhattacharya said 2022 was a successful year with 19 per cent growth at $22 billion in revenue, higher than Ontario and Saskatchewan. The Canadian agricultural sector grew just by 14 per cent. However, he says while prices for wheat, barley and canola rose, so did the costs for farmers with fertilizer and feed, pushing margins thin.

Scott Robinson, Chief Executive Officer of the Chamber, said while the oil and gas industry has positioned the province well and agriculture has been the backbone of their economy, Alberta is also leading in its energy diversification sector with solar, wind, hydrogen, carbon capture and storage, and other emerging technologies like lithium.

ATB economist Siddartha Bhattacharya speaks at Red Deer & District Chamber of Commerce Luncheon on Tuesday at the Holiday Inn & Suites. (rdnewsNOW/Alessia Proietti)

Bhattacharya added that total exports from the province grew by around 48 per cent and while the largest increase came from the energy sector, non-energy exports saw over 18 per cent growth for industries such as machinery and fabricated metals.

Robinson said from a Red Deer perspective, manufacturing and logistics are becoming a growing economic opportunity with investments made to the Red Deer Regional Airport.

AREAS OF CONCERN

Factors causing economic uncertainty, explained Bhattacharya, are rising inflation costs, slowing rates of consumer spending, and high unemployment in the province due to the population growth at an ‘alarming’ rate. He says while migration numbers have increased by 2.5 per cent nationally year to date, they have already increased by 3.4 per cent in Alberta, internationally and provincially from Quebec, Ontario and British Columbia. However, while housing starts hit a seven year high in 2022, they are declining in 2023, along with the rest of the country.

As a result of mismatched skills, an aging population and slow wage increases, he says unemployment is expected to remain at around six per cent in the next two years in the province while the country’s is around five per cent.

Lastly, Bhattacharya noted while the province had a five per cent increase in gross domestic product (GDP) in 2022, they expect to see a slowdown to 2.6 and 2.3 per cent growth in 2023 and 2024 respectively as a result of the global challenges mentioned. However, Canada’s, he expects, will be around one per cent for the next two years.

“We will probably lead the country again in terms of economic growth but there’s not doubt that headwinds, both in the U.S. and on the world stage, we’re going to see the effects of that. Fortunately in Alberta, we have just some other strengths in our economy and things that we’re doing that allow us to sort of escape any kind of negative territory, recession. Slowdown is a bit of a concern but maybe that would allow us to catch up a little bit on the labor front and some of those things too,” said Robinson.

With the recent wildfires across the province, Bhattacharya noted that it may have an impact on the economy, like the oil and insurance industries, as the 2016 wildfires in Fort McMurray saw a 0.6 per cent decrease to the provincial GDP.

The Chamber of Commerce will be holding their first Central Alberta Business Summit on June 6 at the Holiday Inn & Suites, with speakers and business leaders from across the country to share insights with the local business community.

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