Calgary—ATB Financial’s latest quarterly Economic Outlook Report forecasts Alberta’s economy remaining strong while pushing through global headwinds and continuing to build momentum in 2022. Alberta’s economy is facing the same challenges as the rest of the world due to the war in Ukraine: slower global growth, higher inflation, trade disruptions and increased uncertainty. However, because Alberta is a major oil producer with fewer direct economic ties to Russia and Ukraine, the province’s exposure to the negative economic effects of the war is less than in other places and the economy will continue to grow in 2022.

Alberta’s real gross domestic product (GDP) is forecasted to grow 5.0% this year followed by 3.5% in 2023. This comes after a rebound of 5.1% in 2021 from the record 7.9% contraction in 2020.

ATB Financial's Economic Outlook Report outlines two key factors influencing Alberta’s current economic trajectory: 

1. The global economic headwinds that have been created or heightened by the Russian invasion of Ukraine;
2. The high prices for key commodities produced in Alberta including crude oil and natural gas.

Strong Global Headwinds

The Russian invasion of Ukraine is altering the course of the global economy in 2022. Supply-chain disruptions caused by the war are having a significant impact on the price of commodities such as oil, natural gas, base metals, fertilizer and wheat. 

And, while the pandemic continues to create economic challenges, the forecast assumes that subsequent waves of the virus will not be as economically disruptive as what was seen in 2020 and 2021.

Higher Prices

Alberta has received a boost from higher oil prices which has improved the sector’s cash flow and increased capital spending. In some areas, the positive effects of higher prices are counterbalanced by increased input costs. This can be seen in the case of the agriculture industry where fuel, fertilizer, feed, and labour costs have also increased. Although the circumstances of some producers may enable them to reap the benefits of the price spikes, the overall impact of higher inflation on operating costs will weigh heavily on the margins of many.

"Alberta's economy is experiencing the same global headwinds as everywhere else," says ATB's Deputy Chief Economist, Rob Roach. "But, as a major producer of oil, we are benefiting from sky-high prices which are helping to boost our economy."