Economists forecast a return to growth for Calgary in 2017,
The “R” word is back. And this time it means recovery.
After two years of recession, economists are suggesting that Calgary has seen the worst of a painful economic downturn and predict a return to growth in Alberta in 2017.
Both Todd Hirsch, Chief Economist with ATB Financial, and Glen Hodgson, Senior Fellow with The Conference Board of Canada, forecast during Economic Outlook 2017 that gross domestic product (GDP) in Alberta will expand next year by between 2.0 and 2.5 per cent.
Almost 1,300 political and business leaders attended the event hosted each fall by Calgary Economic Development and presented by ATB Financial. The title of Hirsch's presentation was Have We Reached the Bottom Yet? Hodgson had a slightly more optimistic tone with a presentation titled Alberta and Calgary Outlook: Recovery in Sight.
"It's not quite happy days are here again, but … the worst is over," Hodgson said. “We’re now at a point where recovery is possible for Alberta.”
“Modest growth will return,” added Hirsch, “with an emphasis on modest.”
The cautious optimism for Alberta’s recovery is rooted in an assumption the worst is over in the collapse of oil prices that saw West Texas intermediate crude plunge from over $100 a barrel in 2014 to lose 70 per cent of its value early in 2015. Since bottoming out, oil prices have rebounded, but these days $50 oil is seen a sign of optimism.
Hodgson is forecasting the price for WTI to average about $45 a barrel in 2017 and climb to $60-$65 a barrel by 2019.
“We’ve seen the worst in the oil price downturn,” Hirsch said. “We don’t think we’ve seen the worst in the labour market.”
In a little more than two years, Calgary has gone from the city with the lowest unemployment in Canada to the highest. The rate reached double digits for the first time in two decades at 10.2 per cent in November. In its Alberta Economic Outlook 2016-17 , ATB predicted rebuilding Fort McMurray following devastating forest fires last spring will drive Alberta's recovery. It forecast Alberta will see growth of 2.1 per cent next year and another 2.2 per cent in 2018.
That follows declines in Alberta's economy of 4.0 and 2.4 per cent in the last two years.
“It’s easy for us to feel a sense of optimism – we’re staying focused on those green shoots of recovery that are starting to emerge,” said Mary Moran, President and Chief Executive Officer for Calgary Economic Development. She said there are close to 100 companies considered "hot" leads to relocate here.
Mayor Naheed Nenshi told the audience Calgary Economic Development is actively pursuing companies to locate here and the timing is right if a business in looking for people and property,
“If you’ve been priced out of downtown Calgary all this time, now you can sign a long term lease at a very affordable rate in downtown Calgary, but more importantly, you can hire amazing people” Nenshi said.