Red Deer appears to have turned an economic corner, says the Conference Board of Canada.
While low oil and cattle prices led to back-to-back economic declines in 2015 and 2016, there are signs that is about to change.
“The local economy will be on more solid footing this year and next with real GDP (gross domestic product) poised to rebound by two per cent this year and 2.2 per cent in 2018,” said the Conference Board in an overview that came out on Thursday.
The board predicts the manufacturing and housing sectors will especially benefit from a gradual recovery in oil prices.
Red Deer’s construction sector was hardest hit by the downturn “as both residential and non-residential investment dried up, contracting by an annual average pace of 17.6 per cent over the last two years.”
The construction sector is expected to grow by 2.9 per cent this year, said the conference board.
There is good news for job hunters as well.
“Job growth is poised to resume in Red Deer this year, following a record 8.4 per cent drop in 2016.”
Red Deer and District Chamber of Commerce shares the Conference Board’s optimism.
“It’s good news and confirms what we’ve been seeing and hearing anecdotally,” said Reg Warkentin, policy and advocacy manager.
Warkentin notes it has been a long economic haul to this point.
“The recovery is happening much slower than what we had hoped and as the Conference Board report states, it’s a result of low energy prices,” he said.
“Fortunately, companies are finding ways to turn profits in this low price environment and that activity is beginning to trickle through Red Deer into our manufacturing and service industries.”
The area has been fortunate to benefit from several huge infrastructure projects with significant government investment such as the Hwy 2 interchange ($80 million), Gary W. Harris Canada Games Centre ($88 million) and the replacement of the downtown Red Deer Arena ($22 million).
Olymel also recently announced it was planning to invest $2 million in its Red Deer pork processing plant.
Government-funded infrastructure only goes so far. Investor confidence needs to improve to sustain long-term private sector growth, he said.
There are also a number of challenges ahead for the private sector even as the economy improves.
“Businesses have seen major cost increases over the past couple years and will continue to do so as minimum wage increases again in the fall and the increase in carbon tax we’ll see in the new year,” he said.
“We’ll also have major competitiveness issues if President Trump is successful in his tax reform.”
Warkentin said the report is encouraging but it is important that the region remains focused on how to boost economic growth.