Economist bullish on prospects
The economic uncertainties in the United States, Europe and even China have spawned legions of pessimists. But John Rose is not among them.
The City of Edmonton’s chief economist oozes confidence when offering his outlook for Alberta — including Red Deer.
“Although you’ve seen a little bit of weakness in employment numbers over the recent past, certainly (Red Deer’s) economy is now well-positioned for a burst of growth in the latter part of 2012 and into 2013.”
Rose, who was speaking by phone from Edmonton following a trip to Red Deer on Thursday to present at a meeting of municipal treasurers, said the Central Alberta city has been creating jobs in the goods-producing sector — a consequence of the reinvigorated oil industry. That prosperity should spill over into other areas, like retail, residential construction, and food and hospitality.
“The outlook, I would say, for Red Deer — particularly next year — is very, very positive indeed,” said Rose, adding that strong agricultural prices and a good harvest should also stimulate the local economy.
Although things appear upbeat for the province as a whole, with Rose forecasting overall GDP growth of about 4.5 per cent, the disparity in prices between oil and natural gas is producing regional differences.
“The northern half of Alberta is certainly going to be the part of the province that’s going to be the most likely to continue to grow at very high rates,” he said. “The southern and western parts of the province, which have traditionally been more gas-dependent, are not going to see that same kind of very aggressive growth.”
Rose acknowledged that oil prices remain a wild card, with an ever-present risk that global geopolitical events could drive energy commodities down.
“That’s what keeps me awake at night.”
If prices do remain strong, Alberta’s energy sector and the provincial economy face another threat: skilled labour shortages.
The unemployment rate is currently teetering between a balanced and a tight labour market, said Rose. If it tumbles toward the latter, Alberta could face the same worker shortages and spiralling wages that it experienced in the mid-2000s, and which undermined the competitiveness of manufacturers and other industries that compete internationally.
“We have to do everything we can to avoid that circumstance arising again.”
Another concern further down the road is Alberta’s limited capacity to ship oil to export markets.
“If we don’t get significant new pipeline capacity, even into the United States but preferably onto the Pacific Rim to tidewater somewhere, in the period 2016-2017, even if we could produce more oil we’re not going to have a means to ship it.”
That’s why Enbridge’s Northern Gateway Pipeline to the West Coast and TransCanada’s Keystone XL Pipeline to the Gulf Coast are so important, said Rose.
“It’s imperative that these issues be addressed and addressed in a timely way.”
Rose has been with the City of Edmonton since 2010. Prior to that he was director of economics with PricewaterhouseCoopers in Toronto, and held positions with IHS Global Insight, Deloitte & Touche and Standard & Poor’s. He also served with the Canadian Foreign Service in Europe and Asia, focusing on trade development and investment promotion.