Energy-related sector drives provincial growth
TORONTO, Sept. 12, 2011 /CNW/ - Despite the devastating forest fires in
May that disrupted economic activity, Alberta is positioned as one of
Canada's provincial leaders in growth, according to the latest RBC
Economics Provincial Outlook report. The provincial economy is set to
grow at a rate of 3.7 per cent in 2011.
Over the last two years, increased production at major oil sands
projects in Alberta has rapidly boosted crude oil output and signs of
further acceleration emerged earlier this year. The wildfires then
forced widespread shut-downs in late-May and caused oil production to
plummet in the weeks that followed.
"We expect that the negative economic impact from the wildfires will be
short-lived, as most facilities were able to resume operations fairly
quickly after the fires subsided," said Craig Wright, senior
vice-president and chief economist, RBC. "The economic loss associated
with this disaster should be largely recovered in the second half of
Solid investment in Alberta's energy-related sector is the key driver of
economic growth at play in the province. Oil and gas producers are
slated to spend more than 24 billion dollars in 2011, an 18 per cent
increase over 2010.
"Continued strength in energy-related sectors will support a slight
acceleration in economic growth to 3.9 per cent in 2012, maintaining
Alberta's status as a growth powerhouse," said Wright. "This has had a
positive impact on employment, as more than 77,000 jobs were added to
the Alberta economy in the first eight months of this year, which was
the strongest gain ever recorded over this period in the province."
The report indicated that strong employment has helped to boost retail
sales growth. In the first half of the year, consumer spending at
retail stores has ramped up to a brisk six per cent year-over-year
pace. Big ticket items like vehicles remain top of mind for consumers,
while housing has been placed on the back burner. Home construction to
this point has been somewhat tepid in 2011.
Another positive shock from Alberta's red-hot energy sector is its
impact on provincial government revenues - the provincial deficit
projection was slashed in fiscal 2011 by 2.1 billion dollars to 1.3
billion, which may allow the government to move to a balanced budget
earlier than planned.
The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth,
unemployment rates, retail sales, housing starts and consumer price
indices. The full report and provincial details are available online as
of 8 a.m. ET today at http://www.rbc.com/newsroom/reports.html.
For further information:
Craig Wright, RBC Economics Research, (416) 974-7457
Robert Hogue, RBC Economics Research, (416) 974-6192
Elyse Lalonde, RBC Media Relations, (416) 974-8810