Conference board says Calgary's economy to shrink 0.5%
Vancouver takes over top spot for GDP growth as oil slump puts brakes on Calgary's boom
Calgary's economy will likely shrink by 0.5 per cent in 2015, according to the latest figures from the Conference Board of Canada.
Compared to last year's country-leading GDP growth rate of 5.1 per cent, the economy in Calgary has done an about-face.
It's mostly because of the huge drop in energy prices, the board's Metropolitan Outlook: Autumn 2015 concludes.
- Alberta's economy could recover in 2016, ATB's Todd Hirsch says
- Vancouver economy on pace to be fastest growing in Canada
"Oil sector woes are rippling across all sectors of Calgary's economy," the board's Centre for Municipal Studies associate director Alan Arcand said in a release.
Next year looking better
The conference board's outlook is rosier than what some other economists have been predicting. Earlier this month, RBC said there will be a 1.3 per cent contraction in the provincial economy in 2015.
The prospects look somewhat better for next year, Arcand said, predicting a 1.8-per cent expansion of the Calgary economy on the assumption that oil prices will rebound.
The report predicts Vancouver's fast-growing economy will top the nation for growth as Calgary and Edmonton — long-standing economic leaders — both face recession.
Toronto, Winnipeg, Halifax and Montreal will take the rest of the top five spots.
These cities are all expected by the board to post economic growth above two per cent.
The slump in the oil patch — with Alberta's active rig count dropping nearly 60 per cent between mid-December 2014 and mid-August this year — is driving down Calgary's manufacturing, services and housing sectors, the report says.
"In particular, business services output is being hard hit by head office cutbacks of many energy companies," the board said.
Housing starts plummet
Housings starts are down sharply, with local builders embarking on fewer than 13,000 units this year, compared to last year's record 17,100 units.
On the other hand, non-energy and non-residential investment activity is predicted to stay quite busy with new projects going forward in the short term.
- $3-billion StoneGate Landing mixed-use commercial development.
- $1-billion Brookfield Place.
- $500-million Oxford Airport Business Park.
But overall, construction output is projected to contract by eight per cent this year and another five per cent in 2016, the board says.