Edmonton—Alberta’s economy is poised to regain its stride in the second half of 2024 and 2025 driven by improved market access for energy, stronger home construction, and continued expansions in emerging sectors. At the same time, households and businesses will continue to feel the drag from previous interest rate hikes and higher costs. The improvement comes after the provincial economy lost momentum last year amid higher interest rates, a slowdown in the energy sector, and drought-related declines in agriculture activity.

In ATB Financial’s latest economic outlook, Alberta is expected to be among Canada’s growth leaders this year. Alberta's real GDP is forecast to expand by 2.5% in 2024 and 2.7% in 2025, outpacing the national growth rates of 1.2% and 1.8%, respectively.

Several factors are set to shape Alberta's economic landscape in 2024 and 2025:

Long-awaited market access enables production gains

2024 is a breakthrough year for market access in Alberta’s energy sector. After years of constraints, oil producers finally have additional pipeline egress as the Trans Mountain Pipeline Expansion (TMX) entered commercial operations in May. Coastal GasLink provides egress for natural gas producers. We see significant improvements to energy production over the next two years, propelling GDP growth.

Inflation headwinds remain, but easing on rate pivot

While inflation and past interest rate hikes will continue to weigh, the tide is turning. The Bank of Canada's shift towards rate normalisation is expected to continue with further cuts this year and next. These moves are anticipated to bolster confidence and support consumer spending and housing activity in the second half of 2024 and 2025.

Catch-up construction, as population soars

While easing from last year’s record, robust population growth will continue to drive Alberta’s housing activity and spending. Relative housing affordability is expected to encourage continued inflows from other provinces, albeit at a slower rate. The resurgence in home construction stands as a pivotal driver of Alberta's economic improvement in 2024.

Not your typical expansion - more moderate and broader

Alberta's economic expansion is not the result of the typical energy boom. Growth is broadening across multiple sectors as oil and gas investment remains on a lower track. Growth sectors include hydrogen, technology, biofuels, food manufacturing, carbon capture, aviation and petrochemicals,building on resource strengths and greater emphasis on emissions reduction.

"Alberta's economy continues to adjust to a series of shocks over the past decade, the latest being a rising cost of living and interest rate increases. Despite recent challenges, the provincial economy has been resilient. Looking ahead, Alberta's growth is expected to improve over the next two years, driven by improved market access for energy, increased construction activity, and a broadening economic base," said ATB Financial's Chief Economist, Mark Parsons.