Much of Canada is in store for a recession this year, including Alberta; however, the province won’t be hit as hard as other spots in the country.
Canada’s economy is set to see a cool down this year thanks to inflation and monetary tightening to cool price growth, according to the latest forecasts from Deloitte.
“The good news is that we are increasingly confident that peak price growth is behind us, with inflation decelerating steadily since hitting 8.1% in June 2022. We expect to see price growth continue to slow, with moderation already evident in gasoline and food prices as well as homeowner replacement costs, in step with sliding housing prices,” the report stated.
A “deeper” recession is also expected across the country this year, with just Manitoba and Saskatchewan enjoying positive growth, due to the rebound in their agricultural industries after drought conditions dramatically suppressed output in 2021.
The Alberta economy is now expected to enter a recession thanks to its high debt levels (trailing only BC and Ontario) and the drop in oil demand from the United States.
“Despite these factors, the downturn in its housing market is expected to be mild relative to other provinces, and strong population growth will help Alberta weather the modest pullback expected in energy demand,” Deloitte added.
The real GDP growth in Alberta was a strong 4.9% in 2021 and 5.1% in 2022; however, a decrease of 1.1% is now forecasted for 2023 before rebounding by 1.8% in 2024.
Only Saskatchewan, Manitoba, and Newfoundland and Labrador are set to see a lower percentage change in 2023.
The report added that the impact of the housing market downturn will be more pronounced in central Canada and BC thanks to Ontario and BC having the most expensive housing markets and, in return, the highest debt burdens.
Quebec and Ontario are also very exposed to conditions in the United States, so the “downturn south of the border will negatively affect export prospects,” dragging down growth in both provinces.
Job losses are expected to remain low during the predicted upcoming recession thanks to the scarcity of labour on the other side of it, with most of the losses in sectors such as construction, information, culture and recreation.
“This is shaping up to be another rocky year for the Canadian economy,” Deloitte researchers said in the report. “But we’re getting rather used to calling on our resilience and acting nimbly to position ourselves to weather the economic storm — the upcoming recession is simply the latest wave.”