On October 8, 2024, Mark Parsons, ATB’s Chief Economist, presented an outlook for Alberta’s economy at the Calgary Economic Development’s 2025 Economic Outlook.

While risks are elevated, Parsons noted that the province is well positioned heading into 2025 and beyond. With rising oil production, stronger home construction linked to rapid population growth and continued expansion of a wide range of sectors, Alberta is anticipated to see stronger economic growth compared to the rest of Canada. 

These are the key takeaways from his forecast.

1. A soft-ish landing in Canada following high inflation.

The tide is turning in the fight against inflation, which was held between 1–3% since January. After narrowly escaping a technical recession, Canada’s real GDP growth is expected to improve from 1.2% this year to 2.0% in 2025.

But engine repairs are needed on landing, even after interest rates normalize. Canada is contending with sluggish labour productivity and challenging housing affordability - a problem monetary policy itself can’t fix.

2. The Bank of Canada will keep cutting.

With inflation cooperating, Canada saw the central bank cut rates by .75 basis points since June. The bank is not done. Core inflation has moderated, a softer labour market will ease wage pressure and the cost of housing is rising at a slower rate.

ATB expects the central bank to keep cutting, with a projected policy rate of 2.75% by mid-2025. 

3. Consumers will remain cautious.

Though inflation has fallen, Alberta consumers aren’t celebrating—prices are 18% higher than four years ago. ATB expects the lingering effects of past interest rate hikes and inflation to limit growth in consumer spending. Alberta’s rapidly expanding labour force will keep the unemployment rate elevated before easing next year. 

4. Population growth in Alberta to stay warm.

ATB expects Alberta’s population growth to cool from red hot to very warm. People are still flocking here, primarily young households, due to job availability and relatively affordable housing.

ATB projects population growth will moderate from 4.4% in 2024 to 2.8% in 2025 and 1.6% in 2026.

5. Housing starts in Alberta stepping up to meet record population growth.

Record population growth has put pressure on the housing market and Alberta needs more housing supply to keep pace. In 2024 home builders across Alberta have stepped up. ATB forecasts 45,000 housing starts in 2025 and 2026. Home construction is one of the key reasons why ATB expects Alberta’s economy to grow faster than the national economy this year. 

6. Growth broadens - within the energy sector and beyond.

Alberta’s economic diversification door is cracking open more. ATB pointed to growth in sectors like technology, food manufacturing and aviation as evidence of that. Within energy, he also sees growth in hydrogen, propane, petrochemicals, biofuels and liquified natural gas off the West Coast. 

For Alberta’s oil and gas sector, ATB noted that growth is production-driven. This is driven by new market access, which is propelling exports even as oil and gas investment remains fairly steady. Investment has moved downstream, with more investments in petrochemicals, hydrogen and biofuels.

7. Alberta to be among Canada’s growth leaders.

Alberta’s economy has faced a number of challenges over the last decade- a two year recession, market access issues and COVID. But Alberta is expected to return to being a growth leader in Canada in 2024 and 2025. 

ATB forecasts 2.5% real GDP growth for 2024—more than double the national rate of 1.2%—with provincial growth ramping up to 2.8% in 2025, also faster than the 2% ATB expects nationally.

However, with record population growth, per capita economic output and employment will struggle to keep pace. ATB doesn’t see improvement in GDP per capita until 2025, while the unemployment rate is expected to stay relatively high at 6.8% next year.

Parsons left the audience with one word - and. How does Alberta see continued diversification and retain a productivity edge? How does Alberta address global energy and be a leader in emissions reduction? Parsons argued that getting the “and” questions right is key to Alberta’s future economic success.

About the speaker

Mark Parsons is Vice President and Chief Economist at ATB Financial. Over his 20-year career, Mark has served in key senior economic roles with Alberta Treasury Board and Finance, as well as PwC and the Department of Finance Canada. Mark holds a Masters degree in economics from the University of Alberta.