Wednesday, April 28, 2010

Deep in the Red in 2009

It’s finally official: last year was a recession year for Alberta. Statistics Canada released provincial economic accounts this morning,
and it confirms what we all knew was coming.
Alberta’s provincial economy—as measured by the Gross Domestic Product contracted by 5.1% in 2009 (adjusted for inflation). That is the steepest drop for the province in more than a decade. Among the provinces, only resource-rich Saskatchewan (-6.3%) and Newfoundland and Labrador (-10.2%) contracted more.
Prince Edward Island was alone among provincial economies that still managed to post growth, albeit modestly, with an expansion of 0.6%. Canada’s total national economy contracted by -2.9%.
Alberta’s contraction came in higher than was originally expected. Construction activity plunged 23% after several engineering construction projects were put on hold. Falling oil and gas prices also affected mining exploration, which fell 30%.
Western Canada as a region was hit harder in 2009 than central or eastern Canada, reversing the trend toward stronger-than-average growth during most of the past decade. The reason was resource prices, including energy, potash, base metals and forestry products. Saskatchewan, for example, sustained a very large downturn in 2009 largely due to a 50% drop in potash production. Because it accounts for such a large portion of that province’s output, it had a dramatic impact on total output.

Todd Hirsch
Senior Economist, ATB Financial
April 28, 2010

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