Todd Hirsch

Todd Hirsch

Stability expected for Alberta economy

If the decline in Alberta’s growth rate this year is causing you grief, take heart. ATB Financial’s senior economist isn’t losing any sleep over it.

If the decline in Alberta’s growth rate this year is causing you grief, take heart. ATB Financial’s senior economist isn’t losing any sleep over it.

“Faster is not always better,” said Todd Hirsch, who was in Lacombe on Wednesday to speak at a Small Business Week event organized by the Lacombe and District Chamber of Commerce.

In fact, said Hirsch, the 5.2 per cent growth in real GDP that the province achieved in 2011 posed a danger of the economy becoming too hot and resurrecting pre-recession problems like acute labour shortages.

“You want faster growth if you’re Greece or California or Japan,” he explained. “But you don’t really want it if you’re Alberta.”

Hirsch expects the province’s “extremely stable” growth to continue in 2013, supported by its strong energy and agricultural sectors. Consumer confidence is high, he noted, with housing starts here now trending upward and July retail sales setting a record.

The key to this prosperity continuing rests with oil prices, said Hirsch. Instability in the Middle East will push them higher; a decline in the Chinese economy could pull them down.

“My best guess, however, is that we will see oil prices continue probably in that $85-$100US range for West Texas intermediate,” he said, forecasting that geopolitical problems will persist in the Middle East and the Chinese government will be able to use the arsenal of policy tools it still has at its disposal to stimulate that country’s economy.

The situation is not as rosy elsewhere in the world, said Hirsch.

The central banks in places like Europe, the United States, England and Japan have already lowered interest rates as far as they can, forcing them to turn to the “blunter policy tool” of quantitative easing — the practice of buying financial assets from commercial banks and other private institutions as a way to inject money into the economy.

“In the U.S., the (Federal Reserve) has now announced its third round of quantitative easing.”

Hirsch expects Europe’s economy to produce “heightened levels of anxiety” next year, while the U.S. economy will remain in a “stagnant holding pattern.”

“I’m not expecting the global economic situation to really perk up that much in 2013.”

Relief is being stalled by a lack of consensus on how to address the problems. In Europe, some countries are calling for austerity measures and others want increased spending in hopes of stimulating growth; in the United States, Democrats want to boost government revenues and spending, while Republicans favour the opposite.

“The reality is the solution is probably going to lie somewhere between the two visions,” said Hirsch.

Despite the encouraging economic performance in Alberta and Saskatchewan, Canada as a whole is plodding along at about a 1.8 per cent growth rate — comparable to its southern neighbour.

Hirsch explained that Ontario and Quebec manufacturers have been hurt by the high loonie and declining exports to the United States.

He anticipates that interest rates in Canada will remain close to their current low levels for some time.

“My best guess is that the Bank of Canada is just going to keep that rate at one per cent for probably another 12 to 18 months.”

Asked about the recall of beef processed at XL Foods in Brooks, Hirsch said the media’s use of the word “crisis” to describe the situation is unwarranted. The problem has been contained, he pointed out, and the recall shows that the system is working as it should.

He is concerned, however, that the situation could leave a lasting stain on the Alberta beef brand.

“The longer this goes on, the reputation of not only Alberta but Canadian cattle ranchers is at risk.”

Hirsch also responded to questions about the outlook for the Northern Gateway and Keystone XL pipeline projects.

“I think the Keystone XL will proceed, but I don’t think Northern Gateway will,” he said, stressing that this opinion is his and not ATB Financial’s.

Hirsch said the Northern Gateway debate is now being driven by political considerations and not economic or business ones.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Dentists are skills at injections and can help get more Albertans vaccinated, says the Alberta Dental Association and College. (Pxhere)
Use dentists’ injection skills to get more Albertans vaccinated sooner, says association

Dentists can safely give patient injections and want to support the immunization effort

An aggressive arrest by Red Deer RCMP is facing online scrutiny. No charges have been laid and the incident is still under investigation. (Screenshot of YouTube video)
Second video shows moments leading up to violent arrest in Red Deer

Warning: Story and video contain disturbing details. Charges are pending against two… Continue reading

Rocky Mountain House RCMP are investigating a fatal collision involving a pedestrian on Feb. 27. (File photo by Advocate staff)
Rocky Mountain House RCMP investigate fatal pedestrian collision

Collision occured west of Rocky on Highway 11A

A cross-country skier glides along the banks of the Ottawa River in Ottawa on Thursday, Feb. 25, 2021. Canadians across the country can look forward to a mild spring peppered with the odd winter flashback throughout the first part of the season, according to predictions from one prominent national forecaster. THE CANADIAN PRESS/Sean Kilpatrick
Mild spring with some wintry blasts predicted for most of Canada: Weather Network

March will be dramatically warmer through the prairies

Bharat Masrani, CEO, TD Bank Group speaks at the Economic Club of Canada in Toronto on Wednesday, November 1, 2017. THE CANADIAN PRESS/Nathan Denette
Five things to watch for in the Canadian business world in the coming week

Shares in metals and mining companies have rebounded sharply

Red Deer dogs Bunsen and Beaker helped save a missing pet recently. The two dogs have more than 80,000 followers on Twitter. (Contributed photo)
WATCH: Red Deer science dogs help save lost pet

Red Deer science-communicating dogs Bunsen and Beaker helped rescue a missing pet… Continue reading

A ” Justice for Jeff” T-shirt. (Photo submitted)
Rally to be held outside Red Deer courthouse for slain Ponoka man

Sentencing for accused charged with manslaughter with a firearm set for March 4

Team Canada skip Kerri Einarson makes a shot against Team Alberta as second Shannon Birchard, right, and lead Briane Meilleur sweep in the semi-final at the Scotties Tournament of Hearts in Calgary, Alta., Sunday, Feb. 28, 2021. THE CANADIAN PRESS/Jeff McIntosh
Kerri Einarson wins second straight Canadian women’s curling championship

Einarson and her teammates celebrated Sunday in the silence in an empty arena

Amy Poehler and Tina Fey hosted the Golden Globes on Feb. 28, 2021. (Photo by THE ASSOCIATED PRESS)
With loved ones and pets, Globes winners embrace cozier show

Nicole Kidman and musician-husband Keith Urban got glammed up to sit on their couch

The cast of “Schitt’s Creek” pose for a photo after winning the Award for Best Comedy Series at the Canadian Screen Awards in Toronto on March 31, 2019. THE CANADIAN PRESS/Chris Young
Schitt’s Creek nabs two Golden Globes for its final season

Catherine O’Hara named best television actress in a musical or comedy

Alberta Premier Jason Kenney speaks during a news conference in Edmonton on Feb. 24, 2020. It’s budget day in the province, and Kenney’s United Conservative government is promising more help in the fight against COVID, but more red ink on the bottom line. THE CANADIAN PRESS/Jason Franson
Alberta Premier slams vandalism after slur painted on MLA’s office window

EDMONTON — Alberta Premier Jason Kenney is condemning alleged vandalism at the… Continue reading

Canada Pension Plan Investment Board President and Chief Executive Officer Mark Machin waits to appear at the Standing Committee on Finance on Parliament Hill, in Ottawa on Tuesday, November 1, 2016. Executives who engage in so-called "vaccine tourism" show both an ethical disregard for those less fortunate and a surprising lack of business acumen, experts argue. THE CANADIAN PRESS/Adrian Wyld
Vaccine tourism is both unethical and bad for business, experts say

Executives who engage in so-called “vaccine tourism” show both an ethical disregard… Continue reading

Edmonton Oilers' Jesse Puljujarvi (13) and Toronto Maple Leafs' Justin Holl (3) battle in front as goalie Jack Campbell (36) makes the save during second period NHL action in Edmonton on Saturday, February 27, 2021.THE CANADIAN PRESS/Jason Franson
No Matthews, no problem: Minus NHL goal leader, Maple Leafs blank Oilers 4-0

Leafs 4 Oilers 0 EDMONTON — The Maple Leafs knew even with… Continue reading

Leader of the Government in the House of Commons Pablo Rodriguez rises during Question Period in the House of Commons on Parliament Hill in Ottawa, Friday, Nov. 20, 2020. THE CANADIAN PRESS/Justin Tang
Gummed-up bills in House of Commons: harbinger of a federal election?

OTTAWA — All federal party leaders maintain they don’t want an election… Continue reading

Most Read