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Stalled GDP growth doesn't tell full story about economy

Despite forecasting weak GDP growth in Alberta for 2019, ATB Financial Vice-President and Chief Economist Todd Hirsch told Rocky View County council other indicators may give a better picture of the province's overall economic health. Photo Submitted/For Rocky View Publishing

Economic growth may have stalled in Alberta, according to Todd Hirsch, ATB Financial vice-president and chief economist, but that’s not the only metric with which to measure the health of the province’s economy.

“Our forecast for Alberta’s economy this year is very, very weak, if any, growth,” Hirsch said during a presentation to Rocky View County (RVC) council at a regular meeting June 11. “My suspicion is we won’t actually dip back into recession in a technical sense, but [for] a lot of Albertans…still, their reality is that we are still in recession.”

If a doctor measured a child’s height and nothing else, he said, a parent would not have an accurate picture of the child’s overall health – similarly, simply examining the province’s forecast for the GDP growth rate does not provide a full picture of Alberta’s economic health.

He added ATB’s predicted GDP growth rate for 2019 was 0.7 per cent.

“At this point, we’re really quibbling over tenths of percentage points if we’re going to have any growth in Alberta this year at all,” he said. “That’s really tough news for me to deliver.”

The number is especially disheartening, he said, given that following the recession of 2015 and 2016, the economy seemed to be rebounding.

“We are expecting growth to pick up in 2020, but job creation is going to be gradual,” he said. “That is something that, if we like it or not, we’ll have to prepare ourselves for in Alberta – having higher than average unemployment.”

Unemployment is still hovering around seven per cent in Alberta, and according to Hirsch, that number is higher in the Calgary region.

Still, Hirsch said, the rate of GDP growth is only “one thing that matters a little.” Better ways of understanding the province’s economic health, he added, involves examining themes such as the diversification of Alberta’s economy, the growing disparity of income, the ability to move hydrocarbons to market, greater applications of artificial intelligence and understanding the global economy in which Alberta operates.

“Understanding those themes and how we might react to them, I think, will be more important for ensuring our long-term prosperity,” he said.

Of those five themes, Hirsch said, questions surrounding pipelines and the transportation of hydrocarbons are the most important, with the understanding of the global economy being a close second.

According to Hirsch, Alberta is quite a small player in the grander scale, which leaves the province as a price-taker without the ability to impact prices for our resources and goods.

“The global economy probably has a larger impact on us,” he said, “but we can’t affect any of those things.”

Hirsch also noted RVC is well positioned for one sector that could help diversify Alberta’s economy – transportation and warehousing – due to it’s placement on the Calgary-Edmonton corridor.

While Hirsch said he believes these five themes are the key to economic success, others may disagree.

“I’m under no impression that everyone is going to agree with me all the time,” he said. “And even if we agree on the themes, where we may see some disagreement is on what precisely we should do about that as a province, moving forward.”

Reeve Greg Boehlke called the presentation “very interesting and informative,” and council accepted the presentation as information.

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