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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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; H& M( E2 L% A: UGordon Isfeld | February 17, 2015 | Last Updated: Feb 17 6:00 PM ET4 W- G% ?$ [$ ^# m9 X% W: X+ f
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; g" j n& ~% Z; FLast year Alberta lead Canada's growth, but the plunge in oil prices has turned the tables on the nation's energy giants.0 r0 N& h2 T. I' A8 w
BloombergLast year Alberta lead Canada's growth, but the plunge in oil prices has turned the tables on the nation's energy giants.( ^- B+ n3 I$ W) z4 h, W, A8 a! Z
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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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: I% j0 w; L) O+ CThat 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( j1 U5 ]- g& z& A( s
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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.”+ X6 ?! V: J* Z9 K% t+ h
/ k3 t$ k# [/ w! A F; T+ f: Q _( yMost 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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“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.
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& D4 Q1 r: s" `* ?& bAs 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.- O3 p2 r. z# @, f# P2 h' ~+ X
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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%.
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* q9 W3 j6 n/ P" j4 ? [& zIn 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.
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Canada’s oil capitals are headed for their first major housing correction since 2008, TD warns, p' A( L2 W v
Cenovus Energy Inc slashes staff by 15%, freezes pay in ‘challenging times for oil and gas industry’
3 u5 N+ Z: v% D. Y5 LThe best oil traders in the business say this rout is not over. O( ~2 M9 d2 j3 x% J1 s
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( V" M! S$ c+ tThe 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.”! V! V! |* {9 b6 @
2 J4 G3 z4 u2 SFor 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.5 p4 ?1 @. s9 R% H
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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.
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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 2010.1 J/ Z! @3 v, c+ q. `
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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.+ H# q5 p3 F3 r- @3 ^5 R
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Meanwhile, the Canadian dollar closed near the US81￠ level.
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4 x5 H- V( y, u4 k& `, M9 u/ H+ ZThe 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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“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%.
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“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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