Alberta's
economy taking a breather
June 6, 2007
CALGARY -- The Canada West Foundation forecasted today that Alberta's economy will grow by 4.2% in 2007 and 3.9% in 2008.
"Another year of real growth approaching 7%," Brett Gartner, economist and author of A Little Breathing Room: Alberta Economic Profile and Forecast, said, "isn't likely and is even detrimental in the long-term. The strains on infrastructure, housing, and environmental degradation are not sustainable and its time for a little breathing room."
Growth in Alberta, he said, is more than double the national rate. "Alberta is in a class by itself. The province's economic strength is playing a pivotal role in the shift of economic dominance from central Canada to the West."
Albertans, he said, can expect continuing prosperity. "The ongoing strength in worldwide demand for energy resources and other commodities, high levels of construction activity and business investment, and an educated and skilled workforce will all contribute to sustained economic growth."
Public policy developments such as the BC-Alberta Trade, Investment, and Labour Mobility Agreement (TILMA), he added, will only add to the province's economic competitiveness.
But, he said, labour shortages will continue to a problem area ("one of the most talked about factors facing the province"). Housing starts are also expected to cool off and the rate of increase in construction and investment will likely slow down.
"Alberta's inflation rate, which exceeds the national rate by a wide margin, may give consumers pause in 2007. In late May, the Bank of Canada announced that it was leaving its key interest rate unchanged but signaled that an increase may be required in the near term to bring Canada's inflation rate back to its 2% target. Construction costs continue to rise and significant cost overruns on large scale projects are not uncommon."
The oil and gas sector will continue to drive the economy forward, he pointed out, creating jobs and filling the provincial government's coffers. Oil sands production will more than offset anticipated declines in conventional oil production. However, drilling activity is expected to be down in 2007. "Weaker natural gas production will dampen oil and gas sector output," he said.
