Alberta has emerged from the recession and the provincial economy is poised to continue growing in 2018, building on the momentum of a recovery that began last year.
“The province is now once again starting to show some economic growth. I think it’s important that we re-calibrate our frame of mind and our language away from ‘we’re living in a recession,’” Todd Hirsch, chief economist for ATB Financial, told a crowd of about 100 people last week.
Hirsch was one of three professionals who presented during a speaker series hosted on Monday, March 26 by Sundre ATB Financial at the Sundre Elks Lodge. Also addressing the public were Dave Mowat, ATB's CEO, as well as Chris Turchansky, president of ATB Investor Services.
“We have come through a terrible period of time. But statistically, when I look at all of the indicators that I track every month, the very bottom of the trough of the recession happened right around the summer of 2016,” said Hirsch.
“Now not for a minute do I want to suggest that everything in Alberta is roses and sunshine, because it is clearly not; there are many businesses that are still struggling, there are thousands of people in Alberta who are still without work, or are maybe underemployed.”
But while the provincial economy remains in some ways challenging for elements of the labour market — which he said has to be recognized — Alberta is no longer in a recession, and although the situation is not as great as the golden days of the $100-plus barrel of oil benchmark, things are nevertheless moving in the right direction.
Hirsch went on to discuss five topics he identified for the coming year that will play a role in the province’s ongoing economic evolution: pipelines, high levels of household debt, international trade, the oil and gas sector as well as the labour market.
Before delving into these themes, he also discussed the international economy, and pointed to 2017 as a remarkable year for global growth.
“We saw something actually a bit unusual, what economists would describe as synchronized growth.”
The three major economic areas of the world — Asia, North America and Europe — all simultaneously experienced positive growth, which he called unusual.
“More typically, you would see at least one or maybe two of those major economic areas either slowing down or maybe in outright recession,” he said, adding that in 2017 they were all growing and in fact picking up speed, which is carrying over into 2018, albeit at a reduced pace.
However, he added there has been a shift in terms of uncertainty with politics.
“There are some crazy things going on, you got some geopolitical events, you got North Korea pointing sharp objects at people, and you’ve got a lot of worry, and I think that’s being reflected in some of the stock market volatility.”
While the economist does not predict for the coming year any major geopolitical events or financial market shakeups, the possibility cannot be discounted, he said.
Meanwhile, growth in the Canadian economy last year was almost double what economists were predicting at the start of 2017, he said.
“At the beginning of the year, most of the bank economists and the Bank of Canada were forecasting growth at maybe 1.7 per cent — kind of sluggish. In fact, the Canadian economy grew closer to three per cent.”
Largely fuelling that growth was consumer spending, much of which was done with borrowed money, as well as the housing market boosted by activity in Toronto and Vancouver, he said.
“And we know that can’t keep going forever. So as a result, we are seeing the Canadian economy in 2018 still growing, still in positive territory, but it is showing signs of a little slowdown from what we saw last year.”
Stay tuned for additional coverage on the five topics that Hirsch anticipates will impact the evolution of Alberta’s economy.
