Research and Publications

Alberta-Economic-Outlook-Q2-2015

Issue link: https://read.atb.com/i/1022627

Contents of this Issue

Navigation

Page 10 of 10

SAVING І BORROWING І INVESTING І KNOW-HOW ™ Trademarks of Alberta Treasury Branches. Summary Alberta's economy enjoyed a solid year of growth in 2014 and continued to outperform the rest of Canada. But with oil prices falling—and consumer and business optimism sliding—the provincial economy is facing a challenging 2015. The energy sector has just started to absorb the impact of oil prices that have dropped nearly 60 per cent from a year ago. Despite the low Canadian dollar and a reasonably narrow differential, Alberta producers are suffering restricted cash flow. Capital expenditure plans have been scaled back and employment has started to fall. This is an unpleasant but entirely normal pattern for a labour market that has faced energy price shocks numerous times in the past. The job market is almost certain to show further stress in the second quarter of the year. Of the three oil price scenarios presented in this report, the second scenario is most probable—that is, WTI prices will average within a range of $US 50-60 per barrel. Oil prices could fall further in the second quarter of the year, and the current price volatility suggests that the bottom of the market has not yet been tested. However, prices should stabilize by the summer or early autumn with some gradual price improvement towards the end of the year. Despite the severe challenges in the energy sector, many other industries in the province face much brighter prospects in 2015. Agriculture, forestry and tourism all benefit from lower fuel prices. The lower Canadian dollar will also help commodity exporters and tourism operators. The ATB Financial Economics and Research team projects real GDP growth of 0.8 per cent in 2015, with modest recovery in 2016 and 2017.

Articles in this issue

view archives of Research and Publications - Alberta-Economic-Outlook-Q2-2015