ATB’s latest provincial economic forecast predicts GDP growth at 6.3 per cent in 2021.
ATB said Alberta has come a long way from the early days of the pandemic when GDP activity was in free fall, unemployment was spiking, and rumours of a decade-long economic collapse were circulating.
“From masks to vaccines, we are now able to keep most parts of the economy open most of the time. With that said, the pandemic is not over and it remains a drag on growth, (especially in poorer countries and in sectors like tourism),” said the ATB said in a statement.
ATB assumes that future waves of the pandemic will not derail the ongoing economic recovery.
But while moving in the right direction at a good clip, Alberta’s annual output does not recover the ground lost in 2020 until next year with GDP per capita not catching-up to its pre-pandemic level until 2023.
Hammered by both the pandemic and oil price crash, Alberta’s real GDP contracted by 7.9 per cent in 2020. ATB’s forecast pegs Alberta’s GDP growth in 2021 at 6.3 per cent, followed by 4.0 per cent in 2022 and 2.5 per cent in 2023.
“With both oil and natural gas prices riding high, there is an expectation that the Alberta economy will experience a boom as it has in the past. Unfortunately, things have been — and are likely to stay — different this time around.”
ATB said that while relatively strong prices for oil and natural gas are providing Alberta’s economy with a welcome economic boost, a number of factors are keeping a lid on the oil and gas capital spending that is required to drive another boom. These factors include a reluctance to invest in expanded production while the pandemic is ongoing, transportation constraints, the threat of another supply glut, and efforts to reduce greenhouse gas emissions.
While capital expenditures in the sector remain significant, they are expected to rise only modestly in the coming years rather than trigger a boom like we saw a decade ago when the oil sands were in a major expansion phase.
“Overall, the Alberta economy is well on the road to recovery, but like other jurisdictions, is facing a series of obstacles in the form of the ongoing pandemic, labour shortages, supply chain disruptions and inflation.”