Running uphill: Alberta’s economy heading into 2023
Between high inflation, rising interest rates and the invasion of Ukraine, economies around the world are struggling to keep from slipping into recession.
Alberta’s economy faces the same challenges, but is on track to be one of the top performers in the country this year due to the offsetting boost it is receiving from strong commodity prices.
Our latest forecast pegs Alberta’s real GDP growth in 2022 at 5.0% (unchanged from our May forecast) and 3.0% in 2023 (down half a percentage point from May).
Growth continues to be led by our oil and gas sector, which is benefiting from strong production and drilling activity in the wake of oil prices averaging above US$100/bbl over the first eight months of the year.
Higher commodity prices and a weaker loonie are also boosting export revenues for most of our non-energy industries.
At the same time, our labour market is adding jobs despite ongoing staffing challenges and a lagging participation rate.
Housing activity has started to slow, but house prices will most likely avoid the severe correction expected in some markets.
It is, however, important to highlight that GDP is not a measure of well-being and that Alberta’s recent growth does not mean everything is going well for everyone.
Strong GDP growth is fundamentally better than if things are moving in the other direction, but it does not negate the fact that many families and businesses are struggling with higher prices and rising borrowing costs.
On the bright side, the momentum Alberta has going into 2023 will help our economy weather the economic storm created by the “three I’s” of invasion, inflation and interest rates.
Answer to the previous trivia question: According to the Canada Mortgage and Housing Corporation, the average value of a new mortgage loan in Canada as of the second quarter of 2022 was $375,000. Today’s trivia question: Which is larger: Alberta’s real GDP in 2021 or the combined real GDP of the four Atlantic provinces, Manitoba, Saskatchewan, and the three territories?
The Future Of podcast
Season finale out now!
Todd Hirsch is joined by the Business Council of Alberta's Alicia Planincic and ATB's own Rob Roach for a wide-ranging discussion of the potential long-term implications of high inflation, rising interest rates and the invasion of Ukraine.
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