Alberta Raises Economic Growth Forecast as Oil Industry Recovers

(Bloomberg) -- Alberta’s oil-driven economy is growing more than the Canadian province had expected, by a healthy 4 percent this year, as its main industry recovers from a three-year downturn.

The growth forecast, published Tuesday in Alberta’s latest budget update, is up from 2.6 percent in the first report released in March and tops the revised 3.1 percent projection from a fiscal update in August.

The rebounding oil and gas sector is brightening economic prospects for Alberta, which had been battered by the crude price crash that started in 2014. The province said it has added more than 70,000 jobs since mid-2016, mostly in the private sector, and that the number of drilling rigs has doubled last year’s levels. Crude prices have risen more than 7 percent this year, building on a 45 percent gain in 2016.

Still, challenges remain. The province projects 8 percent unemployment for the budget year that ends March 31, 2018, matching its original forecast but a slight increase from a revised 7.8 percent estimate in August.

The sluggish employment picture is weighing on the province’s revenue. The government projected it will collect C$14.7 billion ($11.5 billion) in income taxes, down from an initial estimate of C$15.1 billion. Total revenue will be about C$44.7 billion, compared with a C$44.9 billion original projection.

On the spending side, the government projected expenses of C$54.7 billion, a 0.3 percent drop from its initial forecast. The province’s deficit will be about C$10.3 billion, narrower than the C$10.5 billion original projection.

The narrower deficit is reducing the province’s borrowing needs. The government said it had gross financing requirements of C$14.9 billion, a 20 percent drop from its original budget.

©2017 Bloomberg L.P.