Alberta to lead economic growth in Canada in '11 after lagging in '10

Another reason to be excited that we do business in Alberta, the province will lead the country in growth next year. This article explanins what accounts for the lift.

CALGARY - Alberta will lead the country in economic growth next year after falling behind the national average this year, says one of the country’s chief economists.

Craig Wright, senior vice president and chief economist for RBC, said Alberta’s economic growth this year, following the recession, will be 2.9 per cent - behind the 3.4 per cent forecast for Canada.

But in 2011 the province will be “top of the pack” with 4.2 per cent economic growth compared with 3.6 per cent for the country, said Wright, who was in Calgary today.

There is optimism building in the Canadian economy but caution is also present due to numerous risks such as the crisis in Greece, he said.

“(But) there’s still risks out there . . . It does keep us somewhat cautious as we move forward,” Wright told a breakfast audience at the Calgary Petroleum Club as he presented his Market Outlook 2010 report on the provincial, federal and international economies.

Wright said “everything right now is about Greece.”

He said the lesson learned from the economic woes in Greece and Portugal is that countries need a credible medium-term fiscal plan based on assumptions to lessen their debts.

Wright said global economic growth, as well as a divergence in growth, will lead to demand for oil.

He said the forecast for oil this year is $80 US per barrel and $90 US per barrel in 2011. And for the long-term he said the “new normal” would be about $85 US per barrel.

Wright said if there is some semblance of stability in the world economy the Canadian dollar will flirt with parity with the U.S. dollar with the key driver being commodity prices.

The forecast, he said, for the Canadian dollar is 97 cents for the end of this year and 93 cents for the end of 2011.

Wright said the Canadian economy can expect “moderate growth” this year of 3.4 per cent with the consumer providing the biggest lift for that growth.

He said the employment numbers in Canada are improving and that’s “going to support consumer spending as we move forward.”

In Alberta, Wright said economic indicators are slower than the rest of the country in the current economic recovery mainly due to employment numbers remaining lower than a year ago.