Alberta GDP expected to grow 3.3 per cent in 2021, but more time needed to recover: ATB
CALGARY -- ATB Financial’s latest economic forecast for Alberta describes the province’s fiscal situation as "a marathon, not a sprint."
The financial institution’s latest outlook shows Alberta’s real gross domestic product (GDP) is expected to grow by approximately 3.3 per cent in 2021, but it will take some time for the economy to come back to where it once was before the global pandemic.
ATB says economic activity has risen since the spring lockdown, but has shrunk to about seven per cent smaller in 2020 compared to last year.
Todd Hirsch, vice-president and chief economist for ATB Financial, anticipates that it will 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 Hirsch in a statement released Thursday.
"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."
ATB has pointed to low oil prices and softer global demand for oil as having a negative impact on Alberta’s economy, with the price of a barrel of West Texas Intermediate potentially staying below US$50 for the next two years.
The low prices are expected to correlate with an adverse effect on Alberta jobs and businesses.
There are still bright spots in ATB’s forecast as Hirsch points to the province’s agriculture sector performing relatively well.
Hirsch adds that beef prices have improved and processing plants are now producing above normal levels to address the backlog.
"We have seen everything from retail sales, job numbers and manufacturing improve since economic activity resumed," Hirsch said.
"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."
But some small and medium-sized businesses may not be able to keep pace.
A survey from the Canadian Federation of Independent Business shows more than half of Canada’s business owners worry another lockdown could force them to close permanently.
“We’re going to spend next few years trying to recoup all the losses,” said Tracey Moore, part owner of Calgary’s Exhibit Studio Ltd.
“If we can even just break even the next few years, I’m happy with that.”
Moore’s company specializes in creating displays for trade shows, but has pivoted more towards printing services during the pandemic. Business is down 83 per cent since March, Moore said, and another lockdown will make things even more difficult.
“If they keeping locking down and a second wave, our timelines just keep getting further and further out from hosting a live event again.”
The CFIB is pushing for federal and provincial governments to provide more relief measures for businesses to allow them to make it through the economic recovery marathon.