Alberta to lead Canadian economy through 2011: TD report
CALGARY- Calgary’s economic growth in the next few years will outshine even the nation-leading forecast released by the Conference Board of Canada this week, says the chief economist for the TD Bank.
Craig Alexander, after addressing the Calgary Economic Development 2011 economic outlook event in downtown Calgary, told reporter’s the board’s forecast may be too conservative, if anything.
The board said Calgary’s economy will hit 3.5 per cent growth this year, then average 4.2 per cent growth each year between 2011 and 2014.
“I think there is a modest upside risk to their forecast for Calgary, given my outlook for Alberta,” Alexander said. “I do have Alberta growing well above the national average in the coming year and carrying forward.”
TD expects the Prairies to grow 2.7 per cent in 2011 and 3.3 per cent in 2012.
Nearly 1,000 people packed the ballroom at the Hyatt Regency to hear the forecast on Thursday. Also presenting was the Conference Board’s Mario LeFebvre, who noted that after its economy shrunk last year, Calgary will lead the country in 2011.
Alexander said the Canadian economy has had a “snapback” from the U.S. financial crisis-led recession of 2009 but its growth will be stifled as the United States, its key trading partner, continues to suffer from economic fragility.
Low growth will keep a lid on interest rates in the United States, he said, but Canadian rates will rise by one percentage point in each of the next two years, powering a rise in the Canadian dollar to par or beyond.
He predicts oil prices will vary between $75 and $85 US per barrel over the next 18 months, growing stronger but at a slow pace, and unemployment will gradually come down.
“The bottom line is the cycle is your friend at this point,” Alexander said.
“Things are coming back up but we’re not going to have booming economic growth either in Canada in Alberta or in Calgary. But I still think people should be pleased with the outcome we get.”
Higher interest rates will still be low enough to allow businesses to buy machinery and equipment and consumers to make big-ticket purchases such as homes.
“The direction is up,” said Alexander. “But let’s remember the level. The level is continued low interest rates for quite a long period of time.”
The economist “fessed up” on real estate, admitting he was wrong in late 2008 when he failed to predict the 2009 real estate boom.
In retrospect, he said, the jump in the market occurred because low interest rates convinced buyers to jump in while economic fears made sellers back out, creating a 24 per cent jump nationally in average prices by mid-2009.
LeFebvre said Calgary’s economic strength is the envy of the rest of Canada and its 4.5 per cent decline in real gross domestic product in 2009 is a blip on a long-term record of better-than-average growth of around four per cent.
“Calgary this time really did suffer a pretty bad economic setback,” he said. “The recession did hit pretty hard in thsi region. But please remember where you guys are coming from.”
The Conference Board’s Metropolitan Outlook, reported in the Calgary Herald Thursday, the board said Calgary suffered through a significant downturn last year with the effects of the global financial crisis resulting in Real Gross Domestic Product declining by 4.5 per cent.
In 2011, economic output in Calgary is expected to grow by 3.8 per cent, by 4.4 per cent in 2012, by 4.3 per cent in 2013 and by 4.2 per cent in 2014, driven in part by population growth that is expected to hit 2.5 per cent this year.
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