The RBC Economic Outlook Report released Dec. 12 projects Alberta’s growth to decline to 1.5 per cent in 2019, from 2.4 per cent this year. Oil production cuts related to pipeline constraints and volatile oil and gas revenues will contribute to this slowdown.
“The oil production cut could lower GDP growth in Alberta by as much as a percentage point relative to prior assumptions,” said Craig Wright, Senior Vice-President and Chief Economist, RBC. “However, the impact will depend on how prices and inventories respond to the cuts.”
B.C. expected to thrive
British Columbia’s economy, however, is expected to grow 2.6 per cent in 2019, up from 1.9 per cent in the previous outlook, says RBC Economics. LNG Canada‘s $40 billion natural gas project will contribute to the province’s economic expansion.
“Given that LNG Canada has indicated that it will spend $18 billion in Canada in the first five-year phase, mostly in B.C, we expect this activity will provide a shot in the arm to the provincial economy,” said Wright. “However, this also has the potential to cause further strain on a tight labour market.”
For the country’s economy as a whole, RBC Economics forecasts Canada’s GDP growth to decrease by 0.2 percentage points to 1.7 per cent in 2019. “Slumping oil prices and higher interest rates weighed heavily on Canada’s economy in the latter part of 2018 and should have a similar effect into next year. Regulatory changes and rising rates will weigh on household spending 2019,” says the outlook.