Alberta, Western Provinces to lead Canadian economic growth in 2017

Alberta expected to outperform all provinces and grow 3.3%

Alberta and Saskatchewan are expected to emerge out of recession and lead the provinces in economic growth this year, according to The Conference Board of Canada’s Provincial Outlook: Spring 2017.

British Columbia is forecast to see growth ease this year, but the province will still tie with Saskatchewan for second place.

“The difficulties in the resources sector are slowly dissipating and helping Alberta and Saskatchewan emerge out of recession. However, the turnaround is still in its early stages and a full recovery will take time,” said Marie-Christine Bernard, Associate Director, Provincial Forecast, The Conference Board of Canada.

Following two years of contractions, Alberta’s economy is expected to outperform all provinces and grow by 3.3 per cent this year. This is an upward revision of 1.1 per cent from an earlier outlook in Dec., 2016

“Economic prospects are also improving across the country, but continued weakness in business investment—both in and out of the resources sector—could hurt economic growth in all provinces down the road.”

Non-conventional oil production in the province will see a big increase this year thanks to new capacity coming online, while energy investment is expected to make a comeback this year and next.

Outside of the energy sector, Alberta is benefiting from improvements in labour markets, consumer demand, and the housing sector.

A bright outlook for the province’s manufacturing sector as a result of the new Sturgeon refinery, along with the rebuilding efforts in Fort McMurray, will also contribute to Alberta’s strong economic growth this year.

The rebuilding efforts of Fort McMurray are expected to add 0.4 per cent to the Alberta’s GDP.

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Saskatchewan’s economy is on a more solid foundation than it was one year ago. The energy outlook is more positive as drilling bounced back last winter and oil production is expected to increase at a good pace over the near term.

As well, adaptation to the low-oil-price environment has led to growing investment into cost-effective thermal extraction technology, which will provide a significant boost to construction over the next three years.

The province’s labour markets are also starting to turn around, boosting growth in household spending. In all, Saskatchewan’s economy is forecast to grow by 2.5 per cent in 2017.

After growing by 3.7 per cent in 2016, real GDP growth in British Columbia is expected to reach 2.5 per cent in 2017.

British Columbia’s housing market has lost some steam, but has proven to be more resilient to cooling measures. Still, the slowdown in housing activity will be felt in other parts of the provincial economy.

Employment, wages, and household spending are all expected to see growth ease. The province’s forestry industry will also struggle over the near term as it deals with the duties on Canadian softwood lumber.