The growth of Alberta’s economy continues with some positive notes but a provincial lender is warning of the potential shock from global trade spats.
ATB Financial says that NAFTA along with other trade disputes around the world could result in a downturn, potentially a global recession.
“Not only is NAFTA in danger, but US trade relations with China, Mexico, the EU and Turkey have worsened significantly. At this time, there is little clarity as to how bad conditions will get. If trade tensions worsen, a global slowdown is almost inevitable,” said ATB’s Chief Economist Todd Hirsch.
In the meantime, Alberta’s economy is growing with interprovincial migration turning positive; oil prices stabilizing; and retail, wholesale, and manufacturing sales all gaining.
Employment is also growing but slowly and full-time jobs are yet to beat the January 2015 peak.
“There are still many people who are struggling, particularly those who are without work,” said Hirsch. “Employment has risen over the last year, but the rate of improvement has been slow and unsteady with the quality of new jobs somewhat in doubt.”
With many companies taking a wait-and-see approach to trade negotiations, ATB is forecasting growth of 2.6% for 2018 and 2.2% for 2019, down one tenth of a percentage point from its May outlook.
Homebuilding likely to fall
The report forecasts that residential construction will cool in the next two years amid high levels of unsold inventory, especially in Calgary and Edmonton.
With sales lower due to higher mortgage rates and tighter lending restrictions, it expects housing starts to fall from 29.3K in 2017 to 27.6K in 2018, 26.8K in 2019, and 26.1K in 2020.