Just before the Christmas break, we presented a list of the biggest economic stories affecting Alberta in 2024.

Today’s Twenty-Four picks up where that list leaves off and looks ahead to what we think will be some of the most important economic stories from an Alberta perspective in 2025.

Federal politics - The Prime Minister announced this morning that he will step down once the Liberal Party has chosen a new leader. Parliament, meanwhile, has been prorouged until March 24. The timing is uncertain, but a federal election will follow later this year, opening the door to a change in government. For Alberta’s economy, a shift in federal energy and climate policy could have a significant impact, so we will be watching this file carefully and incorporating any changes into our forecast.

U.S. politics - Trump 2.0 was a big story late last year, but it will be even bigger once he takes office later this month and we find out how his policy prognostications will be implemented, including tariffs on imports into the U.S. We ran tariff scenarios based on what Trump may, or may not, do in our December economic outlook.

Ukraine and the Middle East - We are coming up on three years of the Russian invasion of Ukraine and we still don’t know when or how the conflict will end or if it will once again lead to economic shocks akin to the spike in food and energy prices that rocked the global economy in 2022. The impact on energy prices and actual supply has been minimal since the Hamas-led attack on Israel on October 7, 2023, but war, violence and geopolitical tension in the Middle East continues to be a potential source of sudden and significant economic disruption. The incoming Trump administration’s approach to Iran will be one of many key stories with economic implications in the months ahead.

OPEC - Speaking of the global oil supply, the rough balance between global consumption and global production continues to hang by a thread held by the Organization of the Petroleum Exporting Countries. OPEC remains focused on keeping a floor under oil prices by voluntarily limiting its production, but with the U.S. pumping more oil than ever and other geopolitical factors in play, a change in OPEC policy could send oil prices tumbling.

China - Chinese demand is a key variable affecting oil prices and commodity prices more generally, which is a concern for Alberta’s export-dependent industries. The Chinese economy, however, has been rather wobbly of late as it wrestles with, among other things, a major downturn in its property market and weak consumer demand. China is also facing a potential trade war with the U.S.

Canada-U.S. divergence - Although tightly woven together in many ways, the economies of Canada and the U.S. have been on different tracks of late with the U.S. posting stronger GDP, employment and productivity growth. This is reflected in diverging monetary policy, with the Bank of Canada lowering interest rates at a faster pace and the loonie losing more ground vis-à-vis the greenback. We expect the divergence to remain a factor in 2025 with the loonie averaging just 71 cents U.S. next year.

Slower population growth - Alberta has been experiencing a population boom, but federal efforts to slow international migration are expected to bring down growth in 2025. We are forecasting provincial population growth to slow to 1.9%, down from 4.4% in 2024. That said, we’ve been surprised by the resiliency of the population boom and there is a possibility that the pace of growth could come in higher than our forecast if, for example, federal targets are not met, Alberta’s relatively strong economy and housing affordability advantage over Ontario and B.C. attracts even more residents from the rest of Canada than expected, and if Trump’s policy toward undocumented immigrants leads to a large inflow of migrants from the U.S.

Weather-releated events - Wildfires have been causing economic disruption in Alberta for some time (e.g., the 2016 fires in the Fort McMurray area curtailing oil production and the destruction of a large portion of the Jasper townsite last year). Hopefully, the coming wildfire season will be a mild one that does not grab headlines. Similarly, drought conditions remain a concern, but we can hope that the weather cooperates and a good growing season is the result.

We will be following these stories as they develop while also watching for unforeseen trends and events. Is there something you would add to our list? Drop us a line at thetwentyfourseven@atb.com.

Answer to the previous trivia question: Trump is the first candidate since Grover Cleveland in 1892—and only the second in American history—to serve two non-consecutive terms as U.S. President.

Today’s trivia question: Which federal Crown corporation regulates the supply of dairy products?