The Conference Board of Canada is predicting that the Alberta economy will be worst hit by the coronavirus pandemic.
Alberta’s decline is much higher than other provinces, with Ontario and Quebec falling by 7.6% and 7.2%, respectively.
According to the Board, Alberta’s economy is suffering more than other provinces because of “double whammy” of low oil prices and lockdowns.
“The outlook for oil prices over the next two years is quite pessimistic because of the impact on transportation which is a big user of oil,” Conference Board of Canada chief economist Pedro Antunes said.
“That affects profits and royalties the government will have to forgo, but the biggest impact … is the capital investment. Firms have cut down to the bare bones.”
In April, the price of Western Canada Select went negative as global prices hit an 18-year low. Oil prices have since improved but are still well below previous years.
The Conference Board estimates that the economic fallout of coronavirus lockdowns will be much higher than previously thought in most provinces.
By the end of 2020, the Conference Board estimates that Canada’s GDP will have contracted by 8.2%.
Barring a resurgence in coronavirus cases, the Board expects that the Canadian economy will largely rebound in 2021.
In an interview with Postmedia, Antunes said that Alberta’s recent investments in its energy sector such as the Keystone XL will strengthen the province’s economy in the future, adding that Canada depends on the energy sector.
“We often hear about how Alberta should diversify. I think Albertans need to realize that it’s hard to diversify when you have such a big contributor to your economy that essentially drives the incomes in Alberta and revenues in Alberta much higher than the rest of the country,” he said.
“But the sector goes through peaks and troughs, it is volatile and does have major swings on the economy.”