"While Alberta is not experiencing a boom, the positive prospects for our oil and gas sector are providing a significant boost that will continue into 2023," said ATB Financial Deputy Chief Economist Rob Roach in a Wednesday press release. The economic forecast said the province will see real GDP growth of 2.8% in 2023 and 2.2% in 2024.
However, Alberta lost more economic ground than any other province in 2020 due to the pandemic and oil price crash. As a result, the province's GDP at the end of 2021 remained 3.6% below 2019 comparables, owing to a 0.3% shortfall nationwide.
Nevertheless, Alberta's government delivered a balanced budget in February due to high oil prices — the second time it has done so in over a decade. It also delivered a $12.3 billion surplus recently.
The forecast also said Alberta's economy would overcome the looming global recession, with the province producing 3.9 million barrels of oil per day in September — the highest levels in its history. It conveyed that oil prices are high enough for companies to increase their capital spending plans.
Roach said he expects a 20% jump in oil and gas extraction capital spending next year and another five per cent in 2024. However, he expects investment to "hit [the] wall after next year" because "without more pipelines, you just can't keep expanding production."
But it's not all gloom and doom. In September, oil companies produced a record 3.88 million barrels of oil a day. Alberta's oil exports to the U.S. will also increase upon completion of the Trans Mountain Expansion Project next gall. The pipeline's capacity will go from approximately 300,000 barrels per day to 890,000 barrels per day.
However, this is likely the last significant capital investment in the province's energy sector for the foreseeable future, a reality that doesn't elude Finance Minister Travis Toews. "Oil prices will go up and down, but we're looking to create more stability, more sustainability in Alberta's income statement," he said.
Despite the need for continued economic diversification, specifically with record growth in tech, Roach says he is "cautiously optimistic" as there is a long way to go to achieve a financial balance between energy and other sectors.
"It does take time to add up to something," said Roach. "It won't come up to the point where it can rival oil and gas, maybe never. That's a big, big tall order. But in terms of economic growth, economic activity, it has been positive, and there's no reason why it won't continue."
According to Roach, consumers facing higher rent costs, groceries and utilities are still in for a tough year. The forecast said that despite inflation falling in October to 6.9% from its 8.1% peak in June, residents can expect the cost of living to remain an issue.
"Alberta will likely lead the country in growth next year, but Albertans will still feel the negative impact of sticky inflation, higher interest rates, and geopolitical uncertainty," said Roach. Signs show interest is slowing and will return to the 2% target by 2024. Interest rates are expected to rise between 4.25% and 4.5% and stay there the following year.
But Alberta's favourable economic conditions have continued to attract considerable interprovincial migrants — more than any other province from the second fiscal quarter of 2021 to the same period in 2022. The province added almost 60,000 people from different countries in 2022, another record.
In August, the United Conservative Party government launched the Alberta is Calling campaign in the Toronto and Vancouver markets to attract skilled, educated, and motivated talent to relocate to Alberta. The campaign highlighted the province's lower cost of living and growing economy as reasons to live, work, and raise a family there.
The forecast said migration levels are expected to bolster Alberta's labour market further and alleviate some staffing challenges. It expects Alberta's unemployment rate to average 5.8% this year and remain around this level in the following two years.