Fuelled by higher energy prices and a surging population, Alberta will outpace all other provinces and territories in terms of real gross domestic product (GDP) growth this year and bucking a broader slowdown in the rest of Canada, according to a new RBC report..The Alberta Advantage is expected to grow by 2.2% in 2023 despite “headwinds” from higher interest rates that could lead to a mild recession in the rest of Canada, says RBC’s chief economist Craig Wright.. Canadian economic growthCanadian economic growth Is slowing in 2023. .Neighbouring British Columbia — projected to be last — and Saskatchewan won’t be as lucky, with growth rates of just 0.5% and 0.8%, respectively, although Gang Green is expected to lead starting next year..“Headwinds from higher interest rates and a slowing global economy are building,” he wrote. “Canada’s economic engine is gearing down.”.Despite lingering price pressures and higher inflation, that in turn will prompt the Bank of Canada to hold interest rates steady until late next year before slowly cutting back, he predicted..“Amid a softening in GDP growth and labour markets we expect the bank to stay on the sidelines, holding rates steady into 2024,” RBC added..A key indicator of a potential recession was a 0.5% increase in the unemployment rate over the last four months — the largest since the 2008 financial meltdown — the report notes. Since the 1970s, there have been just six periods when the jobless rate rose by that much in such a short timeframe and four of them were during recessions. .Though employment growth has slowed, it was still up 19,000 per month over the last quarter. But the number of job openings is drifting lower, signalling labour demand is flagging..“This time, the rise in unemployment has come via slower hiring (relative to surging population and labour supply growth) rather than faster firing,” RBC said..Which is to say, despite an overall 1% projected growth rate for Canada as a whole, per-capita GDP is expected to fall anywhere from 2% to 3%. On a per-person basis, Canadian GDP has now declined for four straight quarters..Some factors that weighed on output will prove ‘transitory’ — including disruptions due to wildfires and a strike by federal workers in April. But there are other indications that a long-expected ‘mild’ economic downturn may have already begun. .“Indeed, economic growth already looks dramatically softer in the context of a surging population,” RBC said..And doubly indeed, persistently low per-capita growth was one of the key factors for holding interest rates flat pointed to by Bank of Canada Governor Tiff Macklem when he spoke in Calgary last week..It follows similar trends in the broader global economy and the US, Canada’s largest trading partner. When it sneezes, Canada catches a cold..Despite higher than expected inflation numbers south of the border on Wednesday, at 3.7%, the Federal Reserve is also expected to hold the interest rate line at 5.5% when it meets next month..What happens in the US will have an impact in the Great White North; if the Fed feels inclined to keep raising rates to meet their own 2% inflation target, there will surely be pressure for Canada to do the same or risk losses to the Canadian dollar..Back home in Alberta though, the stars are beginning to align..Along with the manufacturing and real estate sectors, the oil and gas industry is starting to fire on all cylinders. Wildfires caused some disruptions this spring, “though some evidence suggest these were short-lived,” said RBC. .The energy industry is also boosting spending — largely in the form of new wells drilled — amid sustained demand and favourable commodity prices. Oil and gas investments are now above pre-pandemic levels in nominal terms, RBC said..Along with Alberta’s relative affordability advantage, broadly positive economic prospects have been a big draw for newcomers to the province. Alberta welcomed more than 45,000 interprovincial migrants on a net basis and nearly 100,000 international immigrants (net) last year. .And that population growth rate shows few signs of slowing. .RBC now expects the influx of migrants will contribute to solid growth in consumer spending this year at +6.4%. .“Alberta isn’t shielded from the many headwinds slowing down Canada’s economy, but it continues to stand out for its relative vigour at this point in the cycle," said RBC.."We expect it to rank first among the provinces this year in terms of growth — a spot it’s held many times in the past.”
Fuelled by higher energy prices and a surging population, Alberta will outpace all other provinces and territories in terms of real gross domestic product (GDP) growth this year and bucking a broader slowdown in the rest of Canada, according to a new RBC report..The Alberta Advantage is expected to grow by 2.2% in 2023 despite “headwinds” from higher interest rates that could lead to a mild recession in the rest of Canada, says RBC’s chief economist Craig Wright.. Canadian economic growthCanadian economic growth Is slowing in 2023. .Neighbouring British Columbia — projected to be last — and Saskatchewan won’t be as lucky, with growth rates of just 0.5% and 0.8%, respectively, although Gang Green is expected to lead starting next year..“Headwinds from higher interest rates and a slowing global economy are building,” he wrote. “Canada’s economic engine is gearing down.”.Despite lingering price pressures and higher inflation, that in turn will prompt the Bank of Canada to hold interest rates steady until late next year before slowly cutting back, he predicted..“Amid a softening in GDP growth and labour markets we expect the bank to stay on the sidelines, holding rates steady into 2024,” RBC added..A key indicator of a potential recession was a 0.5% increase in the unemployment rate over the last four months — the largest since the 2008 financial meltdown — the report notes. Since the 1970s, there have been just six periods when the jobless rate rose by that much in such a short timeframe and four of them were during recessions. .Though employment growth has slowed, it was still up 19,000 per month over the last quarter. But the number of job openings is drifting lower, signalling labour demand is flagging..“This time, the rise in unemployment has come via slower hiring (relative to surging population and labour supply growth) rather than faster firing,” RBC said..Which is to say, despite an overall 1% projected growth rate for Canada as a whole, per-capita GDP is expected to fall anywhere from 2% to 3%. On a per-person basis, Canadian GDP has now declined for four straight quarters..Some factors that weighed on output will prove ‘transitory’ — including disruptions due to wildfires and a strike by federal workers in April. But there are other indications that a long-expected ‘mild’ economic downturn may have already begun. .“Indeed, economic growth already looks dramatically softer in the context of a surging population,” RBC said..And doubly indeed, persistently low per-capita growth was one of the key factors for holding interest rates flat pointed to by Bank of Canada Governor Tiff Macklem when he spoke in Calgary last week..It follows similar trends in the broader global economy and the US, Canada’s largest trading partner. When it sneezes, Canada catches a cold..Despite higher than expected inflation numbers south of the border on Wednesday, at 3.7%, the Federal Reserve is also expected to hold the interest rate line at 5.5% when it meets next month..What happens in the US will have an impact in the Great White North; if the Fed feels inclined to keep raising rates to meet their own 2% inflation target, there will surely be pressure for Canada to do the same or risk losses to the Canadian dollar..Back home in Alberta though, the stars are beginning to align..Along with the manufacturing and real estate sectors, the oil and gas industry is starting to fire on all cylinders. Wildfires caused some disruptions this spring, “though some evidence suggest these were short-lived,” said RBC. .The energy industry is also boosting spending — largely in the form of new wells drilled — amid sustained demand and favourable commodity prices. Oil and gas investments are now above pre-pandemic levels in nominal terms, RBC said..Along with Alberta’s relative affordability advantage, broadly positive economic prospects have been a big draw for newcomers to the province. Alberta welcomed more than 45,000 interprovincial migrants on a net basis and nearly 100,000 international immigrants (net) last year. .And that population growth rate shows few signs of slowing. .RBC now expects the influx of migrants will contribute to solid growth in consumer spending this year at +6.4%. .“Alberta isn’t shielded from the many headwinds slowing down Canada’s economy, but it continues to stand out for its relative vigour at this point in the cycle," said RBC.."We expect it to rank first among the provinces this year in terms of growth — a spot it’s held many times in the past.”
