Friday, September 21, 2012


Calgary and Edmonton to lead Canadian economic growth
Energy-related investment to fuel expansion
By Mario Toneguzzi
Calgary Herald September 18, 2012

CALGARY — Calgary and Edmonton are forecast to be the fastest growing economies in Canada over the next four years, according to the Conference Board of Canada’s Metropolitan Outlook-Autumn 2012 released Tuesday.

“Energy-related investment in Alberta is expected to stay vibrant throughout the next four years. For instance, about $29-billion worth of energy-related projects are now underway in the province, and nearly $86-billion worth of projects are proposed for the future,” said Mario Lefebvre, Director, Centre for Municipal Studies, for the board.

“All this investment will continue to be a boon to Calgary’s economy, which remains the services hub of the province’s energy sector.”

The board is forecasting Calgary to have the best economic growth in the country over 2013-2016 at an average of 3.7 per cent followed by Edmonton’s average annual real GDP growth at 3.5 per cent during the forecast period.

For this year, the board is predicting Edmonton will lead the country with 4.6 per cent growth followed by Calgary at 3.8 per cent.

“Without a doubt, I expect that Alberta is going to be the envy of the country moving forward into closing out 2012 and into 2013,” said Ben Brunnen, chief economist with the Calgary Chamber of Commerce. “While the growth will be the strongest in the country, particularly for our cities, that doesn’t necessarily mean that we’re in great economic times.

“There are some storm clouds on the horizon. I expect fully we’ll see a recession in Europe. The Chinese economy is slowing substantially. And the U.S. has its election coming forward. What this means is there’s going to be a dampening on economic growth globally and as a consequence it’s going to affect Canada. That said, the investment in the province has been strong to date and should continue to be strong.”

The board said Calgary is coming off a “very strong performance” in 2011 with economic growth at 5.0 per cent. The strong growth expected during the forecast period will be “helped along by strong consumer spending and spinoff benefits from the energy sector.”

Employment growth is forecast for 4.1 per cent this year in Calgary followed by annual growth rates of 1.9 per cent, 2.6 per cent, 2.5 per cent, and 2.1 per cent from 2013 to 2016. And retail sales are forecast to grow by 9.2 per cent this year followed by growth of 6.2 per cent, 5.3 per cent, 5.3 per cent and 4.8 per cent during the forecast period.

Also on Tuesday, a report by TD Economics said Canada will likely experience a shift from household and government-led growth towards exports and investment, but global headwinds appear to have delayed this transition until the first half of 2013.

In the meantime, the report said, the economy will be stuck in neutral and Canada’s economic expansion will be constrained to a pace near two per cent.

“In the first half of 2012, governments constrained their spending while households pared back their rate of borrowing and spent at a miserly pace. While most major housing markets have held up reasonably well, there are signs — most notably in Vancouver — that markets have reached a peak,” said TD Bank Group’s chief economist Craig Alexander. “And in the near term, the slowdown is expected to broaden across the country, following the implementation of tighter rules on insured-mortgage lending this past summer.

“Canada’s economy has turned out a relatively strong performance in recent years, but the growth has not been broadly based and imbalances have amassed. On the plus side, governments and households, which have been pulling Canada’s economy along by the coat-tails for years, have begun to address their debt challenges. Recent changes to mortgage borrowing rules will help to address part of the over-valuation in housing markets. Going forward, it will be equally critical for the economy to transition to more export and investment-led growth.”

Photo By : Bulliver

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