It’s a boom-bust economy in Alberta and the Conference Board of Canada says the current bust will last for two years, maybe longer.
After years of what it called spectacular growth, the board is forecasting Alberta’s economy will shrink by 1.5 per cent this year.
Chief economist Glen Hodgson told a business audience this morning in Calgary that slumping oil prices will mean tough times in Alberta for 2015 and 2016.
“We’re already seeing the evidence right now, firm by firm, that the rate of drilling is way down,” he said. “Investment will probably be down about 40 per cent in the oilpatch this year.”
‘It has taken a decade or 20 years to build it up, you’re not going to fix it overnight’- Chief economist Glen Hodgson
The conference board is forecasting a net loss in intra-provincial migration this year, meaning more Albertans will move elsewhere in Canada than the number that move to Alberta.
Hodgson says some companies might be reluctant to layoff employees because skilled workers are hard to find. But he is expecting Albertans to have a difficult time maintaining big paycheques or annual raises.
“It has taken a decade or 20 years to build it up. You’re not going to fix it overnight, although there will be pressure right now for firms, for government to try and get their compensation under control given that the revenues just aren’t there anymore,” he said.
Long-time oilman Charlie Fischer says that just like the government, the private sector wants to drop spending — cutting bonuses or giving workers days off without pay.
“There are lots of ways to make sure that you make commitments so that your employees feel that you’re working with them to try and sustain their jobs, because people would rather have a job,” he said.
Outside of Alberta, the forecast is less grim. B.C. is expected to see a three per cent growth and the national economy is expected to grow by 1.9 per cent.