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By Chris Brown

A marathon, not a sprint

ATB says it’ll be a few years before Alberta’s GDP is back to pre-pandemic levels

Oct 8, 2020 | 12:14 PM

A new economic report forecasts Alberta’s real GDP to grow by about 3.3 per cent in 2021, but that it will take a few years for it to return to pre-pandemic levels.

ATB Financial’s Alberta Economic Outlook says the province’s economy will be about seven per cent smaller in 2020 than in 2019.

ATB is forecasting it will likely take until 2023 for Alberta’s annual GDP to surpass where it was in 2019.

“We are still living in a time of uncertainty,” said Todd Hirsch, vice president and chief economist for ATB Financial. “If a second wave leads to another lockdown, we will see the economy fall even lower this year. Alternatively, if we get an effective vaccine soon, we could see growth accelerate.”

While oil prices have rebounded since they dove into negative territory during the height of the first wave, both prices and global demand for oil remain soft with the price of a barrel of West Texas Intermediate potentially staying below US$50 for the next two years. Oil and gas capital spending in Alberta is also forecast to remain low next year — even if global oil demand recovers — which will continue to adversely affect Alberta jobs and businesses.

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On the more positive side, the report says Alberta’s agriculture sector has performed relatively well. Beef prices have improved and processing plants are now producing above normal levels to address the backlog. Food manufacturing sales are also up, outperforming the overall manufacturing sector.

“We have seen everything from retail sales, job numbers and manufacturing improve since economic activity resumed,” said Hirsch. “Still, it will be a long time before we catch up to where we were pre-pandemic. In that sense, Alberta’s economic recovery will be more of a marathon than a sprint.”

Read the complete ATB Financial Economic Outlook here.