02/23/2015 01:57 EST | Updated 04/25/2015 05:59 EDT

Alberta's economy will continue to slide, says conference board report

Plummeting oil prices will cause Alberta’s economy to take a nosedive over the next year, according to a new Conference Board of Canada report.

The board predicts the province’s real gross domestic product (GDP) will contract by 1.5 per cent this year in its Provincial Outlook-Winter 2015.

“The party appears to be over in Alberta, at least over the medium term, as low oil prices send chills through the economy," said Marie-Christine Bernard, the board's associate director of Provincial Forecast. 

"Several oil industry firms have already announced sharp reductions to their capital plans and to employment.” 

Alberta has had several years of real GDP growth in the three to four per cent range, but that’s about to take a hit.

“In the next couple of years, a return to four per cent-plus growth is not in the cards, since oil prices will not hit triple digits any time soon under the current market conditions,” said Bernard.

Alberta budget cuts predicted

The report’s forecast comes at a time as the provincial government considers cuts to programs and infrastructure spending.

Cuts to oil patch investments have already begun with the oil drilling rig count down by 40 per cent in the first week of February. Lower oil patch investment has meant job losses, which will weaken the housing market, consumer spending and fewer new arrivals to Alberta.

Alberta’s economic prospects are expected to gradually improve in 2016.

Meanwhile, British Columbia’s economy is expected to grow by three per cent because of the lower Canadian dollar, strong consumer confidence and strong U.S. economic growth.

The report also downgraded Canada's overall growth to 1.9 per cent, from a previous forecast of 2.4 per cent in November 2014.