Friday, July 31, 2009

Alberta's recovery may be slower, expert warns

A leading Western Canadian business expert says Alberta's resource-based economy may not recover from recession as quickly as some expect.

The Alberta government said this week it expects an overall economic contraction this year of two per cent but said a return to growth could begin as soon the end of this year.

That was in line with a forecast by the Conference Board of Canada, which said recovering oil prices would lead to more jobs and increased consumer consumption.

But Helmut Mach, director of the Western Centre for Economic Research and the School of Business at the University of Alberta, said that despite some positive signs, it's unlikely the economy will spring back that quickly.

"The coming year might see some stabilization primarily as a result of a lot of infrastructure spending by the province and the federal government and the municipalities," said Mach. "But the main drivers of the Alberta economy — the oil, natural gas, oilsands, forestry and agriculture — are going to be lucky to be stable."

Mach said Alberta needs to see oil price stability to precipitate oilsands investment and the forestry industry will only recover when housing starts improve, among other things.

He said things might improve slowly in 2010 if there is a significant upturn in international economic activity that starts to drive oil and natural gas prices upward. Even then, he said a rise in employment will lag behind consumer demand by at least another eight months.

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