The worst of the oil price downturn is over, says ATB
Alberta economy will improve, but hiring will be weak, according to bank's forecast
Two years after the oil price collapse sent Alberta's economy into a tailspin, ATB Financial suggests the downturn is over and the province's fortunes will rise in 2017.
The Alberta bank says the provincial economy will turn the corner next year.
"Our research suggests that the worst of the 2015-16 oil price downturn is now behind us," said Todd Hirsch, ATB's chief economist in a statement.
"Oil prices should continue to grow modestly in 2017. That will bring stability to our province's petroleum sector, but not growth. Hiring and resumption of investment will be weak in 2017."
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Economists have expected economic growth in the province in part because of the anticipated construction boom in Fort McMurray as the city rebuilds from the devastating fire earlier this year.
ATB's declaration that the worst of the downturn is over echoes similar sentiments from commodity experts and oilpatch leaders. Alberta's economy is forecast to contract by 2.6 per cent this year with growth of 2.1 per cent returning next year, according to ATB.
"The projected growth in our GDP is a good sign, but 2017 will still be a tough year as many Albertans will continue to be out of work," said Hirsch. "Things are going in the right direction but employment levels will take time to catch up to the rise in GDP."
Oil prices fell from more than $100 US a barrel in 2014 to under $30 earlier this year. The steep drop forced companies to slash spending and cut more than 40,000 jobs.
The price of oil was about $45 US a barrel on Wednesday morning for West Texas Intermediate. Forecasts suggest prices will average about $56 to $60 in 2017, only a modest increase from current levels.
The latest quarterly earnings showed mixed results for Canada's large oil and gas players.
For instance, Suncor surprised analysts by posting a $392 million net profit in the most recent quarter, while Cenovus posted a $251 million loss and said it's looking for more areas to trim spending.