A new report by ATB Financial, an Alberta provincially owned bank, suggests the province's GDP will grow by 0.4 per cent in 2015, the weakest in six years. The figure is down from the last projection in March of a 0.8 per cent growth rate.
While some forecasters have predicted a recession for the province, ATB still predicts there will be some growth, no matter how scant.
"It is going to feel rough for a while, but none of us should panic," said Todd Hirsch, chief economist with ATB. "This is a garden variety downturn."
Alberta has been hit hard since global oil prices began to plummet a year ago. The value of West Texas Intermediate, the North American benchmark, fell from $100 a barrel to about $45 a barrel in the last 12 months. The price has rebounded, although it's fluctuated between $50 and $60 a barrel in the last three months.
"I think we're going to see some more volatility over the summer. That then poses some more challenges for Alberta's economy in the second half of the year," said Hirsch.
While the oil and gas sector is suffering, Hirsch said the province's agriculture, tourism, and forestry industries are all performing well.
Employment in Alberta this year has been flat overall, although the energy sector has lost 25,000 jobs since September, a drop of 13.5 per cent, according to Robert Kavcic with BMO Capital Markets.
"We've added 38,000 new jobs. However, there has been a change in the composition of the job market," said Hirsch. "We've seen more lower paying jobs added and we've lost good paying jobs."
Real estate, hotels and drilling
Economists look at a variety of industries and statistics to come up with their forecasts. Here are some economic indicators to provide a snapshot of how Alberta is performing in 2015.- The real estate market is faring worse than expected so far this year. In January, the Calgary Real Estate Board was projecting sales to drop by four per cent in 2015. In the first six months of the year, sales are actually down 26.5 per cent. Prices are down two per cent.
- The hotel industry was expecting a drop in activity this year, especially with the business crowd which usually travels during the week. In the first quarter of 2015, weekday occupancy dropped 5.6 per cent, however the weekend occupancy rate increased 4.1 per cent, according to Tourism Calgary. Business travellers account for about 25 per cent of hotel stays in Calgary.
- Expectations for drilling activity in the province continue to fall. Initially, in November, the Canadian Association of Oilwell Drilling Contractors forecast a 10 per cent decrease in activity in 2015 from 2014. That meant Canadian land-based drilling rigs would drill 10,354 wells in 2015. Two months later, the organization revised its expectations to predict a 41 per cent drop to 6,612 wells. In June, it revised again and announced a 50 per cent drop from 2014, with drilling of just 5,531 wells.
Final numbers on the province's economy won't be available until 2016, when Statistics Canada releases provincial GDP data.