Alberta’s economy is set to shrink by 7.5 per cent this year – the second biggest contraction in the country behind Newfoundland & Labrador’s 7.8 per cent contraction, according to a new report by CIBC Economics.
The bank’s latest Provincial Outlook however forecast economic growth of 4.2 per cent in 2021 and 6.1 per cent in 2022, which would be the best in the country.
For this year, CIBC is forecasting a recession for every province as the national economy will contract by 5.6 per cent. Across the country, the economy is forecast to grow 4.0 per cent and 4.8 per cent in 2021 and 2022 respectively.
“Overall, economic contractions experienced this year won’t be quite as bad as we had previously expected across the country. Moreover, for the four largest provinces, the average rate of contraction in nominal GDP (which tracks closer to revenues than real GDP) could be around 1.5 per cent less severe than was penciled into the most recent provincial fiscal updates,” said the report.
“However, with case counts (of COVID) rising again and restrictions on social gatherings being tightened, provincial governments will be wise not to assume that a somewhat less dark 2020 means a brighter 2021 — particularly with most planning to lay out multi-year budget revenue projections for the first time post-pandemic this Fall.”