Alberta will be a leader in national economic growth this year and next, according to a report by Scotiabank Economics.
The report said Alberta’s economy will grow by 2.4 per cent this year, followed by 2.5 per cent growth in 2019.
That follows a 4.9 per cent increase for the province in 2017.
Alberta’s level of growth will be just behind British Columbia’s nation-leading 2.5 per cent this year and tie its western neighbour in 2019 for the top-performing economy in the country.
Nationally, the bank is forecasting economic growth of two per cent this year and 2.1 per cent next year.
“Data to date in 2018 confirm continuing momentum across most provinces, with manufacturing orders still climbing, infrastructure spending proceeding and a long-awaited business investment recovery gaining traction,” said the report. “At least half of the provincial economies this year and next will likely operate above their longer-term growth rates, maintaining upward pressure on wages and prices.
“In most regions this year, business investment is forecast to be a key source of growth, with government spending a continued support. In 2018, rising imports to meet consumer and capital demand are forecast to erode net exports; next year easing import growth should boost net exports.”
The report said investment in conventional oil and gas in Alberta remains buoyant after the 2017 rebound exceeding 50 per cent, but oil sands investment is expected to be subdued this year and a sizable pick-up in non-residential, non-energy construction awaits in 2019.
“Though eroded by higher imports, petroleum and non-energy exports are expected to shift higher in 2018,” said the report. “Oil production is expected to ramp up at Hebron, Newfoundland and Labrador’s fourth offshore field, and in Alberta, an increase north of five per cent is anticipated. At Alberta’s major Syncrude oil sands facility, output as of late June is expected to be disrupted for at least five to six weeks.
“With a subsequent rebound anticipated, Alberta’s real GDP growth is edged slightly lower to 2.4 per cent. Potential volatility in the light-heavy oil price differential due to pipeline capacity constraints is a risk through 2019, though the recent approval for the Line 3 pipeline refurbishment is encouraging.”
Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.