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Ahead of the crowd: Alberta’s economy heading into 2024

Ahead of the crowd: Alberta's economy heading into 2024

ATB Financial revised Alberta’s economic growth forecast up to 2.7% for 2023 but down to 2.0% for 2024 due to high interest rates. The province has shown resilience amid inflation thanks to robust population growth and energy sector recovery. However, the impacts of aggressive rate hikes are expected to be felt more in 2024 after a period of strong expansion.

Over the past year, Alberta’s economy has demonstrated remarkable resilience in the face of rising inflation, surpassing the performance of many other regions. Factors such as robust population growth and a reinvigorated energy sector have positioned Alberta’s economy to continue outpacing others, even as it faces the challenge of higher interest rates.

Consumer spending, employment opportunities, and population growth have all exhibited greater strength than initially anticipated in our previous economic outlook. Consequently, our forecast for real GDP growth in Alberta for 2023 has been revised upward to 2.7%, compared to the 2.4% projection made in June. However, with the expectation of enduring elevated interest rates, our growth forecast for 2024 has been adjusted downward to 2.0% from the previous estimate of 2.2%.

Mark Parsons, Chief Economist at ATB Financial, remarked, “Alberta’s economy has successfully navigated through formidable challenges, including the tumultuous oil price crash of 2014-15, obstacles in market access in 2019, and the unprecedented difficulties posed by the 2020 pandemic. The province’s economy has not only recovered but is now firmly in an expansion phase.”

As we approach the final months of the year, ATB’s latest economic forecast delves into the crucial factors shaping our economy. Given the heightened uncertainty, this edition of the outlook incorporates scenarios with both optimistic and pessimistic outlooks.

Population Growth Surge: Alberta is currently experiencing record levels of net international migration and near-record gains from interprovincial migration. Over the past year, the province has added over 200,000 residents to its population, marking the highest growth rate since 1981. ATB has revised its 2023 population growth forecast to 4.5%, signifying the most substantial increase in four decades. While population growth is expected to moderate in the coming year, it will remain relatively robust, supporting consumer spending, housing demand, and an expanding labor force.

Energy Sector Revival: Alberta’s largest sector, the energy industry, has undergone a remarkable recovery from the lows experienced during the COVID-19 pandemic. Increased investment and production in the energy sector have been significant drivers of Alberta’s real GDP growth, positioning the province ahead of the national average for this year and the next. Additionally, other sectors such as aviation, tourism, technology, food manufacturing, biofuels, petrochemicals, hydrogen, and emissions reduction investments are expected to contribute to growth over the medium term.

Navigating Inflation Challenges: The Bank of Canada has implemented a series of aggressive interest rate hikes, totaling 4.75 percentage points since March 2022, marking one of the most robust tightening cycles since the 1990s. Although we anticipate the central bank will pause its rate hikes for the remainder of this year and initiate rate reductions in the following year, the more substantial impacts of these measures are likely to be felt in 2024.

Turbulent Factors: While Alberta’s economy has been on a faster growth trajectory, it has faced its share of disruptions. Economic activity was hampered by wildfires in May and June, and strikes at West Coast ports in July affected trade with Asia. Additionally, the agriculture sector encountered challenges due to significantly drier-than-normal weather in specific regions.

Mark Parsons concluded, “Alberta’s economy has demonstrated resilience and is expected to outperform this year and the next, primarily due to rapid population growth and a rebounding energy sector. With headwinds on the horizon, we anticipate a slowdown in growth next year before picking up again in 2025.”

About ATB Financial

ATB Financial is a prominent financial institution with assets totaling $58.3 billion. Originating in Alberta, Canada, ATB Financial is committed to prioritizing people’s needs and delivering exceptional experiences. The institution boasts a workforce of over 5,000 dedicated team members who serve more than 800,000 clients across various sectors, including Personal and Business Banking, ATB Wealth Management, and ATB Capital Markets.

ATB Financial offers a wide range of expert advice, services, and products through its extensive network of branches, agencies, a 24-hour Client Care Centre, entrepreneur centers, and digital banking platforms. The institution’s mission is to empower possibilities for its clients, communities, and beyond.

For more information about ATB Financial and its services, you can visit their website at atb.com.

General Disclosure:

ATB Financial’s Economic Outlook serves as general information and is intended for educational purposes only. It should not be considered as specific legal, financial, tax, or other professional advice or recommendations. While the information presented is believed to be reliable and current, it is not guaranteed to be accurate or to provide a comprehensive analysis of the topics discussed. The opinions expressed in the report reflect the judgment of the authors as of the publication date and are subject to change. Actual outcomes may differ significantly. ATB Financial and its affiliates disclaim any liability for errors or omissions in the information, analysis, or views presented in this report, as well as any losses or damages incurred. Furthermore, ATB Financial and its affiliates do not explicitly or implicitly endorse any third parties or their advice, opinions, information, products, or services.

For more information or interview requests, please contact: ATB Financial, Media Relations media@atb.com

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