Calgary’s economy will see a modest recovery next year after two consecutive years of declines, the Conference Board of Canada predicts.
The city’s economy will contract by 2.1 per cent this year after shrinking 3.2 per cent in 2015, the board forecasts in its latest Metropolitan Outlook. But the city looks to rebound next year, the board predicts, with GDP expected to grow by two per cent and employment numbers expected to improve.
In its analysis, the board said low oil prices have hurt the energy sector, as well as sectors with ties to the industry, such as construction, transportation and warehousing.
“At the same time, the weak economy and falling employment are weighing on consumer confidence, leading to declines in housing market activity and in personal services, which includes accommodation and food and also arts, entertainment, and recreation,” the board says in its report.
Construction has been hit especially hard, as investment related to the energy, office and residential markets has seen “large reductions.”
But the board predicts benchmark oil prices are set to rise — and lift the local economy.
“The Conference Board expects that 2016 will mark the trough of this latest recession,” its report says.
With rising oil prices, the board predicts “layoffs and cuts will ease in the coming months, laying the foundation for a modest upswing next year.”
Along with the general economic growth, the Conference Board forecasts employment in the Calgary area will increase by about one per cent next year, after a decline of about 1.7 per cent this year.
While the outlook is positive for Calgary, the board cautions that there remains some uncertainty regarding oil prices — and notes that lower-than-expected price gains would cause it to downgrade its outlook for the city.
Beyond 2017, the Conference Board suggests growth will accelerate in the province, with GDP growth of 2.9, 2.6 and 3.3 per cent forecast for 2018 through 2020, along with employment growth of 2.0, 2.3 and 1.9 per cent for the same three years.