By Kalinowski, Tim on December 14, 2019.
RBC is projecting a slight rebound in the Alberta economy next year after an admittedly “puny” year of growth in 2019 where the economy essentially stalled.
“Considering the starting point of 2019 was disappointing, with growth of barely 0.5 per cent, we’re looking at next year with some reason to be cautiously optimistic.”
RBC is projecting a respectable 1.7 per cent growth in the province’s GDP in 2020, far more optimistic than another report released by ATB Financial earlier this week which projected 0.9 per cent growth for the province in 2020. ATB also noted the possibility of an overall retraction in the provincial economy in 2019 when all the final year-end data is in.
RBC chief economist Robert Hogue acknowledged the unexpectedly poor performance of the province in 2019, but felt projected growth in the energy sector next year would lead to better-than-expected growth in other sectors of the economy as well.
“We have seen some signs the energy transportation system, not just pipelines but more broadly, there should be a little bit of an inc-rease on that front,” Hogue said. “We’re not arguing things are going to be perfect, and that all the problems will be solved, but through pipeline efficiency and the fact that the Canadian portion of Line 3 is now online, and also the fact crude-by-rail capacity is going to increase, we see some reasons to be somewhat optimistic.”
RBC also expected the gradual lifting of the province’s cap on oil production and corporate tax breaks instituted by the Kenney government might also give a slight boost.
“Exports are probably going to pick up due to increased oil production, and that’s probably the basis for growth next year,” stated Hogue. “But let’s be clear – we’re talking 1.7 per cent in GDP growth. This is not be any means a very strong performance and Albertans next year will probably not see things are finally back to where they ultimately would like things to be.”
Hogue said as long as Albertans keep their expectations in check, they should see some encouraging signs of growth in the provincial economy next year as it moves along at a pace of incremental improvement.
The RBC report notes this type of incremental improvement might be the new norm in Alberta – a far cry from the days of the boom economy the province has witnessed after bust cycles in the past.
“The six years it will have taken to recover the recession’s losses are a reminder that the path forward will be full of potential obstacles,” it reads. “This is no longer Alberta’s boom-bust economy of old when it could reliably be counted upon to snap back into shape after a setback.”
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