If you’re wondering about the economic outlook for Central Alberta, look elsewhere — most notably Europe, the United States and China.
That’s the advice Todd Hirsch offered during a presentation to members of the Central Alberta Rural Manufacturers Association on Monday. Speaking to the Advocate on Tuesday, the senior economist with ATB Financial said he warned his Red Deer audience that Alberta and Canada are vulnerable to developments half a world away.
“The theme basically was that there are a lot of danger signs in the global economy right now.”
Specifically, he said, the turmoil and uncertainty in Europe as countries there wrestle with their sovereign debt crises is cause for concern.
“That’s kind of weighing on the entire global economy at the moment. Even things like commodity prices or the Canadian dollar, they’re getting kind of beat down a bit.”
The ongoing American debt ceiling crisis is “another danger sign,” added Hirsch.
There’s also the possibility of China’s and India’s economies slowing, which would drag down global commodity prices, including oil’s.
For the most part, said Hirsch, Canada has been doing the right things on the policy side. But the country isn’t immune to the economic uncertainties brewing elsewhere.
“We’re a bit like the innocent victim that’s been pushed into the pool of crocodiles.”
Alberta has benefited from oil selling in the $80 to $100 range for the last six months or so, he said. But this could change quickly.
“If those oil prices were to slip to $60 or lower, and stay there, due to falling demand in Asia, this province will find itself very vulnerable.”
However, Hirsch believes the more likely scenario is one in which the global economy retains some level of stability and oil prices remain steady. Based on his travels through the province, it appears many others are also positive.
“I think optimism in Alberta is still really high.”
Hirsch suggested keeping an eye on the Euro. If it takes a nosedive, that indicates a loss of confidence in the European currency.
As for warning signs out of the United States, he said the labour market there bears watching. If it doesn’t rebound over the next 12 months, then structural unemployment may have taken hold and there will be no quick fix.
hrichards@www.reddeeradvocate.com