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Alberta will sink into recession this year, as provincial fortunes turn amid oil’s collapse, CIBC predicts
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+ Y* K, ^* U) Z# ]; }2 hRepublish Reprint
4 H, [4 I& x- b9 r5 pGordon Isfeld | February 17, 2015 | Last Updated: Feb 17 6:00 PM ET
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Last year Alberta lead Canada's growth, but the plunge in oil prices has turned the tables on the nation's energy giants.% G" }5 e8 N" R! l2 y H- U
BloombergLast year Alberta lead Canada's growth, but the plunge in oil prices has turned the tables on the nation's energy giants.
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OTTAWA — Consistently low oil prices could dramatically alter the economic landscape of Canada in the coming year and beyond, with Alberta slipping into a “mild” recession as a weak dollar helps lift the manufacturing hubs such as Ontario.
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That pattern is already being reflected in a slowdown in the oil patch-fueled housing market in Calgary and Edmonton, in addition to an anticipated knock-on increase in unemployment rates in the province.: S+ p, j2 o) h/ S) j, i0 b
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In a report released Tuesday, titled The Tables Have Turned, economists at CIBC World Markets said recent data show “just how sharply the growth leadership is likely to swing.”; h2 x+ w$ P; \! o
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Most startling, perhaps, is the likelihood Alberta will go from the leading economic power house in 2014 to recessionary levels this year.
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# a7 S# C; N+ S6 L( l/ u* d$ S“Alberta looks headed for a mild and temporary recession,” said economists Avery Shenfeld and Nick Exarhos, pointing to a 0.3% decline in 2015, compared with 4.1% growth in 2014./ G% I$ P! h$ P r# W/ P
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As well, they see growth in Saskatchewan — the country’s other major resources-heavy province — suffering in 2015, managing an advance of only 0.8% this year, after 1% in 2014, but likely avoiding an outright downturn.
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However, Newfoundland and Labrador — also reliant on energy revenues — could contract more significantly this year, by 1.3%, and in 2016, by 1%.. J) D4 y0 ^* v1 v* v6 n
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In contrast, Central Canada “should enjoy a small upside surprise,” thanks mainly to a healthy U.S. economy, CIBC predicts, along with a lift in exports from a weak Canadian dollar.) y% h% s E! d* g
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+ v5 R$ W& z! t! }Canada’s oil capitals are headed for their first major housing correction since 2008, TD warns
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3 {8 W' O* T z4 ~7 U. F' @% QThe best oil traders in the business say this rout is not over
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& Z: b8 E9 e! w) K2 CThe Ontario economy will expand 2.8% this year, up from 2.1% in 2014, and add 2.8% next year, according to CIBC. Quebec should add 2.4% this year and 2.6% in 2016, after a restrained advance of 1.8% in 2014, the bank said. At the same time, British Columbia will continue its mid-2% growth trend.
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“That will translate into commensurate shifts in the employment picture, alleviating pressure in some areas — where, if anything, workers are currently in scarce supply — and lowering the jobless rate in Central Canada, where it has been stuck above the national average.”2 E( v4 j# x% {
2 F# |" j% @, h! A; N5 J6 BFor example, Alberta’s jobless rate could rise to an average of 6.8% this year, from 4.7% in 2014, the CIBC said, while Ontario should see its unemployment level fall to 6.6% from 7.2% last year.
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CIBC expects overall growth in Canada to be around 1.9% this year, down from 2.4% in 2014, and rising by 2.5% next year.; u4 j1 g& q% m7 L" z* Y0 n2 v, V
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Contrast those with the Bank of Canada’s 2.1% outlook for this year and 2.4% in 2016 issued in January, when policymakers surprised markets by cutting their benchmark lending rate to 0.75% from 1%, where it had stood since September 2010.
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% n1 t8 K7 p8 e4 Q* j( [& ]The central bank’s GDP forecast is based on an average oil price of US$60 a barrel in 2015 and 2016. Crude was trading above US$53 on Tuesday, a gain on recent sessions.) b. E) V& o% y% H9 n
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The regional shift is also evident in the housing market, where the slowdown in Calgary and Edmonton helped pull down national sales by 3.1% in January from December and by 2% from a year earlier, the Canadian Real Estate Association said Tuesday.
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2 _8 W/ h# n! L, x7 u1 q3 \“As expected, consumer confidence in the Prairies has declined and moved a number of potential homebuyers to the sidelines as a result,” CREA president Beth Crosbie said.
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Total January residential sales in Calgary were down 35.5% from a year earlier, while Edmonton fell 22.7%, Saskatoon lost 24% and Regina was off 6.9%.7 V" H5 r. o! ?4 K6 N; ^) u
U: I3 N5 n; A8 B2 [“There’s little mystery behind the sudden reversal of fortune for the national figures, as sales in Calgary and Edmonton — and Saskatoon — fell more than 20% from a year ago, in what had been the hottest markets in the country,” said Douglas Porter, chief economist at BMO Capital Markets. |
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发表于 2015-2-1 17:34
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