The Conference Board of Canada says a slow recovery in the oil and gas sector will allow Alberta and Saskatchewan to emerge from recession and lead the provinces in economic growth this year.
In its spring provincial outlook, the board says Alberta will have the fastest growing economy this year after two years of contractions. Real GDP is forecast to increase by 3.3 percent, thanks to the startup of a new oilsands refinery near Edmonton and efforts to rebuild Fort McMurray after the 2016 wildfire.
Saskatchewan and British Columbia are expected to tie for second place at 2.5 percent this year, based on stronger drilling numbers and labour markets in Saskatchewan and slower housing and forestry sectors in B.C.
The board says all provinces will grow this year except Newfoundland and Labrador which will shrink by 3.0 percent before bouncing back in 2018 on new oil production at the Hebron offshore project.
Ontario is forecast to slow to 2.3 percent in 2017 thanks to a slowing housing market in the southern part of the province, while Quebec will advance by 1.8 percent in consumer spending boosted by tax cuts and job creation. Manitoba is to post 2.1 per cent growth.
Nova Scotia’s outlook is forecast to advance by just 0.5 percent this year, while New Brunswick’s GDP growth is expected to hit 1.0 per cent and Prince Edward Island is to rise to 1.8 percent in tourism and manufacturing sector.
“The difficulties in the resources sector are slowly dissipating and helping Alberta and Saskatchewan emerge out of recession. However, the turnaround is still in its early stages and a full recovery will take time,” said Marie-Christine Bernard, associate director of the provincial forecast for the board.
“Economic prospects are also improving across the country, but continued weakness in business investment—both in and out of the resources sector—could hurt economic growth in all provinces down the road.”
At the Alberta legislature Monday, Finance Minister Joe Ceci called the forecast “good news.”
“It shows that jobs are returning, confidence is returning to this province (and) recovery is in the process,” said Ceci.
It was a sharp contrast to last week when the Alberta government was hit with another credit downgrade. S&P Global Ratings reduced Alberta’s rating two notches, from AA to A-plus.
S&P cited concerns with provincial debt it expects will reach $94 billion by 2020.
Ceci said S&P’s recommendation for tax hikes or billions of dollars in cuts would not serve Albertans well as it digs out from financial problems caused by low oil prices.
“I like our plan,” said Ceci. “I think Albertans like our plan.”