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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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Gordon Isfeld | February 17, 2015 | Last Updated: Feb 17 6:00 PM ET3 i5 u" n) E; s/ b; p9 Z
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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.2 @8 Y& k( x+ K- t( S
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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( _6 y7 n7 p7 _- C9 j5 ]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.% G9 f" V/ T; V$ G1 O9 T
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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.”+ I+ x* W# t, d' B# @3 @- L
: K/ `4 T# S: s' e& w( u( y! UMost 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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S, \. j( I0 T5 o/ c5 r6 a" C, F“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.! @4 f- g2 D; D
: Y1 d1 I( D0 |# }. LAs 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.: ~3 g* I+ T9 S+ P
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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%.5 @! b% n4 [% ]$ c1 V/ r `8 i
; n6 w& c- L" V: {7 i- y: N* u9 U6 bIn 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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: O2 d) }9 h. i" h' ?1 A8 e+ v7 `Canada’s oil capitals are headed for their first major housing correction since 2008, TD warns3 V& S! I0 R! F& a( j1 c
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' S4 }0 h: g5 B: K; v+ V! mThe best oil traders in the business say this rout is not over3 n+ P& O' }' H1 e5 n
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The 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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; C6 ?. ~( c1 d7 t% p3 ?" c$ v$ d“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.”
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For 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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* U3 ~( N# g) N: t' O: m( i- iCIBC 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.( a) V; }! P2 s/ |) z$ H |) r
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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$53 on Tuesday, a gain on recent sessions." E3 N3 M+ D( [, E3 G
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Meanwhile, the Canadian dollar closed near the US81￠ level./ Y' j9 w1 R9 H) f) H$ b" o
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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., K8 Z8 R& N* v# M4 o! u4 [& W$ ^
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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." p2 `# B9 x2 L# q4 w
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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%.) C3 |( m7 T- ~7 E& l2 j: W8 }
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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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