Posthaste: How Alberta is on track to become a nation-beater again 

Oil production set for strongest year since 2018, say economists

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Alberta has taken its share of knocks lately.

A catastrophic water main rupture has put Calgary on water restrictions for weeks and crews are scrambling to get the line running before the Stampede begins July 5.

The turmoil comes amid an economy that has fallen short of expectations.

Normally a nation beater, Alberta ranked in the middle of the pack in 2023 with growth in gross domestic product at 1.5 per cent, dragged down by declines in construction and agriculture and a weaker-than-expected performance by the energy sector.

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But brighter days are ahead, economists predict.

Oil production is on track for its strongest year since 2018 now that the Trans Mountain Pipeline extension has been completed, says TD Economics in its provincial forecast.

“Our forecast for a 300k/bpd increase in Alberta’s oil supply growth is a major contributing factor to Canada’s expected success as a global swing producer this year,” said the report.

The extra capacity has also boosted the price of Alberta oil, Western Canadian Select, and TD’s forecast of just US$13 a barrel below West Texas Intermediate‘s US$80 could boost the province’s revenue beyond projections.

TD expects Alberta will return to the upper end of the provincial growth chart with 1.9 per cent real GDP growth this year and 1.9 per cent next.

Deloitte Canada’s forecast is even more optimistic.

“The Alberta economy is benefiting from a population surge as Canadians from other provinces flock to Wild Rose Country is search of a lower cost of living,” said Deloitte in its provincial forecast.

“That and the opening of the Trans Mountain pipeline expansion will keep Alberta growing above the national average, with GDP gaining 1.5 per cent this year and 3.3 per cent next year.”

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Saskatchewan is not far behind. This province beat Alberta last year with 1.6 per cent growth as its construction sector grew at the fastest pace in 15 years, said TD.

Potash, which has become the province’s number one export, is a driving force. Construction of Phase 1 of the Jansen potash mine is bringing investment and jobs into the province and potash production has ramped up this year, said TD.

The unemployment rate here has been the lowest in the country and affordable housing prices have helped shelter residents from the impact of higher interest rates and supported consumer spending.

TD forecasts the province’s real GDP will grow 1.7 per cent this year and 1.7 per cent next.

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GDP chart

Canada’s economic growth perked up a bit in April, but an early estimate from Statistics Canada suggests the rebound was short-lived.

GDP grew by 0.3 per cent in April from March but that growth is estimated to have slowed to 0.1 per cent in May.

If that prediction comes true, economists expect the economy to grow 1.8 per cent year over year in the second quarter, slightly above the Bank of Canada‘s forecast in April.

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However, because Canada’s population is still growing faster than the economy, GDP per capita (or per person) is still falling, said CIBC Capital Markets economist Andrew Grantham.

This week’s employment data and July’s inflation numbers will be more important in determining whether the Bank of Canada will cut interest rates at its July meeting, said Grantham.

  • U.S. Federal Reserve Chair Jerome Powell joins a policy panel at the European Central Bank Forum on central banking in Sintra, Portugal
  • Real estate boards for some of Canada’s biggest cities will release their home sales figures for June this week. The Calgary Real Estate Board is expected to release home sales today, while Vancouver is expected on Wednesday. Home sales for Toronto are expected on Thursday.

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Do you know what a write-off is? Jerry Seinfeld and Cosmo Kramer sure didn’t, nor did four siblings in Ontario who charged personal travel expenses to the family business they owned. Tax expert Jamie Golombek has the details of the case and the subsequent appeal.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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