A snapshot of Alberta’s finances shows the projected deficit continues to drop and revenues are holding steady, but the nose-dive in the price for Alberta oil could mean a much darker picture in the long term.
A second-quarter financial update released Friday morning shows the provincial deficit forecast for 2018-2019 sits at $7.5-billion — about $1.3 billion less than originally predicted.
Stronger than expected oil prices in the first half of this year contributed to a surge in non-renewable resource revenues for the province.
But Alberta has watched the gap widen between the price it gets for its oil and the world price over the last six weeks. That price differential was sitting around US $30 per barrel in October, compared to the US $22 difference predicted at the start of the fiscal year.
The province suggests the price differential will average out at $26 a barrel at the end of 2018-2019.
But, even with no immediate solution to the price gap in sight, talk of recession may be premature, the province said.
The province predicts overall growth in Alberta to continue in 2019 at about two per cent — which would be in-line with the Canadian average.