Monday, May 3, 2010

Tough Year in 2009

Statistics Canada announced last week that in 2009
Alberta’s economy experienced its largest one-year
contraction since record keeping began in 1981. However,
as is typically the case, some sectors were hit hard while
others were relatively unscathed.

Overall Alberta real Gross Domestic Product (GDP)
declined by 5.1% in 2009. GDP is a measure of how much
an economy produces and takes account of everything
from manufacturing to haircuts at the local barber. If the
amount of total ‘stuff’ that gets produced falls (ignoring
changes in prices), economists say there was a recession –
which is what happened in Alberta in 2009.

The construction industry saw the largest fall in output
during the year, with real GDP in that sector declining
22.6%.This was due mainly to fewer housing starts and
lower spending on oil and gas engineering projects
like pipelines and oilsands. Output in the agriculture
and forestry sectors were the second hardest hit
(-20.8%), mostly due to lower crop and livestock

On the positive side, GDP in the health care and social
assistance sector grew 3.2% as did that from public
administration, which is basically government
spending on public services.

This illustrates the importance of having a diversified
economy; output in volatile industries like
construction and oil and gas are great when there is a
boom, but they can hurt during recessions.

Dan Sumner
Economist, ATB Financial

May 3, 2010

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