Provincial recession caught up with Edmonton in 2019: City economist


It’s been a difficult year for business and the economy in Edmonton, says the city’s chief economist — and things aren’t likely to improve soon.

“2019 was actually a rather difficult year. Our growth rate is now down to about 0.5 per cent, which is the lowest it’s been since 2015 or 2016,” said John Rose in a recent year-end interview.

The sluggish year comes on the heels of a positive 2018, which saw the city’s economy grow by 3.7 per cent. Unemployment in the city is now 6.7 per cent, up slightly from 6.5 per cent last year.

“It’s been a very poor year in terms of economic output. We’ve actually seen job losses, we’ve lost about 11,000 positions,” Rose said.

Total change in employment in Edmonton in 2019 was actually significantly worse than province-wide, with Alberta gaining about 20,400 positions overall.

In Edmonton, the majority of job losses came in the public administration, business services, construction and education sectors.

Generally, Edmonton’s economy is more resilient than the province’s due to a lesser reliance on the energy sector, but Alberta’s downturn is starting to catch up with the province. The sectors that saw job losses in 2019 were largely the same ones that had previously withstood the province’s sluggish economy.

“We didn’t see any significant softness in the Edmonton economy until 2016, and that’s just because of the relative diversity of the Edmonton economy,” Rose said. “Basically what happened was in late 2016 things started to catch up with our manufacturing sector in particular, and our professional services, and that’s spread to the rest of the economy.”

It’s not a recession in Edmonton, however, as there was growth in 2019. Still, Janet Riopel, the president and CEO of the Edmonton Chamber of Commerce, is blunt about her take on the city’s current economic landscape and its effect on business.

“In the broadest sense, (2019) was the fifth year of the worst economic downturn we’ve felt in a generation,” Riopel told Postmedia. “That means that businesses that started in 2015 or late 2014 really had to figure out how to streamline operations, cut costs, reduce their spending.

“They started to do that in the first year of this. By about the second or third year, they had taken every measure they could think of to try to be sustainable. But the truth is that sustainability gets more and more difficult every year.”

Edmonton Chamber of Commerce president and CEO Janet Riopel poses for a photo, in Edmonton Tuesday Nov. 26, 2019.

David_Bloom David Bloom /

David Bloom/Postmedia

The fact that 2019 featured two elections means governments have a chance to influence Edmonton’s economic trajectory — for better or for worse.

Riopel says the new United Conservative Party budget, which plans to reduce the size of Alberta’s public service by 7.7 per cent over four years and features a projected $8.7-billion deficit, will boost Alberta’s economy by making investors more confident in the province.

“We have been urging, pleading with government to find a path back to balance over the last four or five years,” Riopel said. “The fact that this budget now has shown the charting of a path back to balance is very encouraging.

“We have very strong signals from government that they will get us back on course.”

Rose, however, has a different view of the budget.

“Without doubt, the province does have a fiscal problem, and it needs to be addressed,” he said. “That being said, with the approach being taken by the current provincial government, there’s no question it’s going to be a negative for the Edmonton economy.”

Specifically, Rose says sectors of post-secondary and public administration will suffer. He also says potential infrastructure cuts, like that to the Valley Line West LRT line, could mean significant cuts to construction activity in the city.

Both Rose and Riopel agree, though, on the most important role for the federal government to play in helping business recovery in Edmonton: finish the Trans Mountain pipeline.

“Their primary role right now for us is to ensure that they own a pipeline and that that pipeline actually gets built,” Riopel said. “That has to be number-one on their priority list.”

There’s some worry that the federal Liberals could change their position on energy-related issues given that they need cross-party support as a minority government. Rose paints pipelines as something of a silver bullet — a finished pipeline won’t necessarily kick Alberta back into prosperity, he says, but that recovery can’t happen without it.

“Without additional pipeline capacity from Alberta to markets, you’re really not going to see a vibrant recovery in the Edmonton economy or the Alberta economy,” Rose said.

As things stand now, Rose expects the city to make a modest recovery, with Edmonton’s economy projected to grow by 1.4 per cent in 2020 and 2.2 per cent in 2021.

Historically, Alberta has recovered from slow economic times by way of energy booms. But Rose asserts that the city will never return back to the boom period seen before oil prices plummeted.

“My concern is that this time, it’s simply not going to happen that way,” he said. “This time we’re not going to get another energy boom.”

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January 2, 2020 |

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