2020 economic outlook - home - alberta central...economic co-operation and development’s (oecd)...

2020 Economic OutlookB Y C H A R L E S S T- A R N A U D , C H I E F E C O N O M I S T , A L B E R TA C E N T R A L

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Although growth globally and across Canada is expected to be limited, Alberta may finally see some relief and see improvements in economic activity, investment and employment numbers.

In 2020, it is expected that several themes will emerge across the economy.

1. Continued global friction.

2. Slowdown in the United States.

3. Domestic progress, global stagnation.

4. Alberta to grow.

OUTLOOK 2020: LAST YEAR'S LOSERS COULD BE THIS YEAR'S WINNERS.

2 0 2 0 E c o n o m i c F o r e c a s t

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EXECUTIVE SUMMARY:

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Global f riction continues

# 0 1

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Global economic environment faces ongoing challengesThe International Monetary Fund’s (IMF) latest forecast for the global economy is for the weakest global growth rate in 2019 since the global financial crisis of 2009, at 2.9%. The world economy is expected to improve in 2020, with a growth rate of 3.3%. The Organization for Economic Co-operation and Development’s (OECD) latest forecast also suggests a similar outlook for 2019-2020.

Global trade frictions arise from America First doctrineSince arriving in power in 2017, American President Donald Trump has pursued protectionist trade policies as part of his “America First” doctrine. This position translated in the renegotiations of multiple trade agreements, including NAFTA, the imposition of trade barriers on specific products like aluminum and steel, and the imposition of import tariffs on goods from particular countries.

However, the confrontation between the United States and China has had the most significant impact on the global economy. So far, the United States has imposed tariffs on the equivalent of US$250 billion (bn) worth of Chinese goods and has threatened to increase this amount to $550bn. In retaliation, the Chinese imposed tariffs on US$60bn of imports from the US. While the share of trade affected by tariffs and other barriers remains relatively small, its impact on business confidence and investment is evident. This situation has led to the first decline in global trade outside of a recession period.

In early 2020, the United States and China reached a phase 1 accord to de-escalate the conflict. However, the impact of such a deal is likely to be small, as the agreement does not include a rollback of past tariffs, just an elimination of the upcoming one. Nevertheless, a small-scale deal could help restore some of the business confidence but risks causing some collateral damage to other countries. For example, the deal includes an increase in Chinese purchase of American agricultural and other products at the expense of other trading partners like Canada. Regardless, a complete resolution of the Sino-American trade war is still not on the horizon. Moreover, the calm on the United States and China front could pave the way for an exacerbation of the conflict with the European Union.

The protectionist trade policies of

Donald Trump will continue to cause friction across the global economic

landscape.

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F I G U R E 1 . W O R L D T R A D E V O L U M E A N D I N D U S T R I A L P R O D U C T I O N ( % Y - O - Y )

S O U R C E : C P B W O R L D T R A D E M O N I T O R

F I G U R E 2 . G L O B A L M A N U F A C T U R I N G P M I

S O U R C E : M A R K I T , B L O O M B E R G .

N O T E : A P M I B E L O W 5 0 I N D I C A T E S A C O N T R A C T I O N .

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-15

-10

-5

0

5

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15

20

2000 2003 2006 2009 2012 2015 2018

World Trade

Industrial Production

40.0

45.0

50.0

55.0

60.0January 2018December 2019


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A tug-of-war between manufacturing and servicesThe main casualty of the contraction in global trade has been countries that rely heavily on exports and the manufacturing sector. They have seen their growth slowed rapidly over the course of 2018 and 2019. Recent data suggests manufacturing sectors are stalled in many countries, notably the Eurozone, the United States, Japan, Korea and Taiwan.

Growth in the service sector slowed in 2019 but remained resilient. As a result, we are not seeing increases in the unemployment rate in the countries affected by the downturn in the manufacturing sector, with levels staying close to their lowest since the financial crisis. This situation provides support for domestic demand and some resilience to the trade shock. As the labour market is a lagging indicator of the economic cycle, and firms hold off laying off workers until it becomes unavoidable, close monitoring of this situation will still be required.

Global monetary easing to continueCentral banks around the world have reacted to the weaker growth in 2019 by providing monetary stimulus. The European Central Bank, People’s Bank of China, Federal Reserve and others have taken action over the past few months that will help support growth, provide some insurance against the downside risk to the growth outlook and shelter the global economy from a recession.

Commodities and weak global growthWeak global growth will impact demand for commodities in 2020. Upside pressures on commodity prices should remain modest, keeping prices, especially base material, from increasing too rapidly.

On the energy side, global supply remains ample with production in non-Organization of the Petroleum Exporting Countries (OPEC) countries still increasing, while demand for energy is slowing due to weak global growth. Barring a disruption or further voluntary cut in production, this should prevent any meaningful increase in oil prices. OPEC and Russia announced in December a reduction in oil production targets, however, this will have a muted impact oil prices, as the group was already producing below target for most of the year.

The international benchmark price of West Texas intermediate (WTI) is expected to remain around the current range, between $50 and $65 a barrel, with median expectations seeing WTI at $56.60 in 2020. Oil futures show that financial markets expect oil prices to decline slightly in 2020, with the December contract at $55.50 compared to a spot price of $58.70. With tensions increasing in the Middle East, the risks to oil prices are to the upside.

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F I G U R E 3 . O I L P R I C E S ( U S D )

S O U R C E : B L O O M B E R G

0

20

40

60

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120

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2008 2010 2012 2014 2016 2018

West Texas Intermediate

Western Canada Select


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F I G U R E 4 . U S I N S T I T U T E O F S U P P LY M A N A G E R S I N D E X

S O U R C E : I S M , B L O O M B E R G . N O T E : A P M I B E L O W 5 0 I N D I C A T E S A C O N T R A C T I O N .

30

35

40

45

50

55

60

65

1997 2000 2003 2006 2009 2012 2015 2018

RecessionsManufacturingNon-manufacturing

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Slowdown in the United States

# 0 2

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United States economy slowing, but no recessionThe economic health of the United States is particularly important to Canada as its biggest trading partner. The United States economy has slowed significantly since the summer of 2018, from a growth rate of about 4% year-on-year (y-o-y) to present 2.1% y-o-y that, although acceptable, is still below the average of the current economic cycle.

Part of the slowdown is related to the waning impact of the tax cuts introduced in 2018. The Congressional Budget Office estimated ahead of the introduction of the tax cuts that the lower tax would boost growth by about two percentage points by mid-2018, but the positive impact would gradually decline to be closer to 0.5 percentage points by the end of 2019.

As witnessed in other countries, the American manufacturing sector is also being affected by the Sino-American trade tensions and by the decline in global trade. The Institute of Supply Manager Index for the manufacturing sector has declined steadily since August 2018 and has been below the 50 threshold separating expansion from contraction for the past five months. The slowdown and uncertainty are also affecting business investment, with core durable goods orders and shipments weak since the beginning of 2019.

The domestic economy is also slowing; however, the slowdown so far is mainly the result of the diminishing positive impact on growth from the tax cuts. Nevertheless, some of the economic uncertainty is also affecting investment intentions. On the consumer side, the continued strength of the labour market with continued employment gains and the lowest unemployment rate on record is supporting consumer confidence and spending.

Despite the robust domestic economy, financial markets have been concerned about the risk of a recession. More specifically, the US yield curve, the difference between long-term and short-term interest rates, turned negative in May before going back into positive territory in recent weeks. A negative yield curve has been a relatively reliable predictor of a recession over the past 50 years. However, some factors may make the yield curve a less reliable indicator in the current context. Notably, the fact that the Federal Reserve holds a large proportion of long-term government bonds may have distorted long-term yields.

We believe growth will slow further in 2020, reaching 1.7%, but a recession is unlikely to happen thanks to resilience in consumer spending, a healthy labour market and rate cuts by the Federal Reserve in 2019 that should keep economic doldrums at bay. It is likely we’ll see no rate cuts, with any further policy rate reductions dependent on domestic demand and labour market strength.

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Domestic progress, global stagnation

# 0 3

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The Canadian economy has proven to be robust in 2019 despite the global growth slowdown, with growth hovering between 1.5% and 1.9% y-o-y. However, the headline growth number masks the tale of two different economies. On the one hand, consumer and government spending remain robust, while, on the other hand, the private investment sector continues to underperform. The external sector is mixed as weak export performance is offset by weakness in imports.

While the domestic conditions are very favourable and supportive of growth, Canada is not an island and exports the equivalent of about a third of its Gross Domestic Product (GDP). With the slower global economy and trade and the global contraction in the manufacturing sector coupled with the high levels of uncertainty, our economy is taking a hit. The goods-producing sector has been in decline for most of 2019, while the service sector has remained robust. The global environment and uncertainty are affecting the willingness of Canadian businesses to invest, leading to a broad-based decline in private investment. We believe that this dichotomy in the Canadian economy will persist for most of 2020.

Although consumer and government spending in Canada remains robust, private investment continues to underperform, due

to continued uncertainty.

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F I G U R E 5 . C A N A D I A N G R O W T H B Y S E C T O R ( % Y - O - Y )

S O U R C E : S T A T I S T I C S C A N A D A

F I G U R E 6 . E M P L O Y M E N T R A T E 1 5 T O 6 4 Y E A R S O L D ( % )


-4

-2

0

2

4

6

8

2011 2013 2015 2017 2019

All industries Goods-producing Services-producing

60

65

70

75

80

85

1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Canada Alberta


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Strong labour market helps support households and the housing sectorThe strong labour market is an important support for consumer spending. The unemployment in Canada is very close to its lowest level since 1976 and the share of the population aged 15 to 64 years old in employment is at a record high. There are no signs of a pause as job creation remains strong, with almost 300,000 jobs created in 2019.

However, there are some signs that the pace of hiring is slowing in recent months that could lead to a gradual rise in the unemployment rate in 2020, as the speed of hiring cannot absorb the increase in the population. However, we do not expect a decline in the level of employment, which means that the moderation in the labour market should have a minimal impact on the financial health of households. Nevertheless, the pace of consumer spending may slow in 2020, as households become increasingly cautious in their spending and willingness to increase consumer debt levels.

The positive labour market environment and low interest rates are leading to a rebound in the housing market. After a decline in activity in 2018 and early 2019 following the introduction of the mortgage stress test, the impact of previous increases in interest rates and increased tax to stem speculation in some jurisdictions, the housing market is rebounding. We believe that resale activity and house prices will continue to recover in 2020, supported by low mortgage rates and a continued reduction in inventories. However, this is with some caution, as residential investment and renovation activity will likely remain muted due to consumer hesitation around spending.

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F I G U R E 7 . N U M B E R O F H O U S I N G T R A N S A C T I O N S I N C A N A D A

S O U R C E : C A N A D I A N R E A L E S T A T E A S S O C I A T I O N

F I G U R E 8 . H O U S E H O L D D E B T R E L A T I V E T O D I S P O S A B L E I N C O M E


25,000

30,000

35,000

40,000

45,000

50,000

2008 2010 2012 2014 2016 2018

40

60

80

100

120

140

160

180

1990 1994 1998 2002 2006 2010 2014 2018

Mortgage Other Total


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With more activity in the housing market, a further rise in debt levels is likely, especially mortgages. We are not yet seeing any significant increases in the indebtedness ratio, with gains in income staying higher than debt, but we are witnessing a concerning rise in insolvencies in Canada, suggesting that an increasing proportion of households are struggling to meet their financial obligations. So far, the increase in insolvencies is mainly due to debt restructuring, rather than bankruptcies, suggesting that households are taking steps to improve their finances but this will require close monitoring in 2020.

S O U R C E : S T A T I S T I C S C A N A D A , B A N K O F C A N A D A

F I G U R E 9 . D E B T - S E R V I C E R A T I O V S I N T E R E S T R A T E S

S O U R C E : I N N O V A T I O N , S C I E N C E A N D E C O N O M I C D E V E L O P M E N T C A N A D A

F I G U R E 1 0 . C O N S U M E R I N S O LV E N C I E S ( 1 2 M O N T H S U M , ‘ 0 0 0 )

0

1

2

3

4

5

6

7

8

9

10

6

7

8

9

10

11

12

13

14

15

16

1990 1994 1998 2002 2006 2010 2014 2018

Debt-service ratio - TotalDebt-service ratio - Interest onlyBoC Policy rate (rhs)

7

9

11

13

15

17

19

110

120

130

140

150

160

170

2009 2011 2013 2015 2017 2019

Thou

sand

s

Thou

sand

s

Canada Alberta

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The business sector and external tradeThe continued weakness in the global economy will remain a headwind on Canadian growth, influencing our economy gradually. There are already some signs that this is happening, with some surveys like the one from the Canadian Federation of Independent Businesses showing a reduction in business confidence, investment and hiring intentions. This means that the current weakness seen in business investment is expected to remain in 2020. At the same time, after a record year in terms of hiring, we believe the pace of job gain will decelerate.

On the external side, weak global growth will remain a headwind for exports. Nevertheless, we believe that a continued reduction in oil production curtailment in Alberta should support energy exports. On the import side, a weakening of domestic demand will lead to weaker import growth. As a whole, we believe that the external sector will make a positive contribution to growth, but mainly as a result of weak imports rather than strong exports.

In addition, the signature of the United States-Mexico-Canada trade agreement (USMCA) should reduce some of the uncertainty for many exporters and improve the investment environment.

Government expected to play more significant roleWhile most government measures are yet to be announced, likely to come is a reduction in taxes for the middle class, higher spending and an increase in tax on big corporations (including internet providers) and top earning households. While it is an educated guess, as little details are available, taken altogether the measures should be a small positive to growth. It is doubtful, however, that the announced reduction in the federal basic personal amount (the income threshold at which an individual starts to pay income tax) or any cut or tax credit to households will meaningfully increase consumer spending. High household debt levels are likely to mean that the extra income will be used to repay debt instead.

The most recent Economic and Fiscal update shows that the federal government’s budget deficit is more significant than initially thought at $21 billion, as a result of extra expenses due pension adjustments. This means that the deficit for fiscal years 2012 to 2020 is $4.2bn bigger than expected before any new measures. This could reduce the ability of the government to spend more while holding the size of the debt relative to GDP constant.


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Moreover, while the federal government is ready to increase its level of spending, provincial governments are holding back on spending, led by Alberta and Ontario. This situation could leave the overall impact of fiscal policy on the economy close to neutral.

2020 Forecast for CanadaWe expect growth in Canada to be 1.7% in 2019 and to decelerate to 1.5% in 2020. As a result of the weaker economic growth, the unemployment rate may gradually increase to 6% over the course of 2020 (a level still low by historical standards). With growth remaining below potential creating an increase in supply and some slack in the labour market, we believe that inflationary pressures are likely to diminish somewhat. This would push inflation lower by the end of 2020, with headline and core inflation expected to reach 1.8% by the end of the year.

We believe the weak economy and inflationary pressures, coupled with the downside risk coming from a lacklustre global environment, will push the Bank of Canada (BoC) to provide some stimulus. In my view, the BoC will cut its policy rate in the first half of 2020. The timing of the rate cut will depend on the resiliency of the incoming data and may transpire at the April meeting. This would bring the policy rate to 1.50% by mid-2020. While is it not clear the economy will necessitate more than one rate cut, it would be unusual for the BoC to only cut rates once when initiating a new wave of stimulus, so the risk is that there could be more than one rate cut.

Canadian dollarThe Canadian dollar has been one of the best performers in 2019. This is mainly the result of the decision of the BoC to leave its policy rate unchanged while other central banks have increased the amount of monetary stimulus, leading to Canadian rates being higher than other industrialized countries. With the Canadian economy slowing, commodity prices remaining low and the BoC likely cutting interest rates, we believe that the Canadian dollar will depreciate somewhat against other major currencies in 2020.

In 2020, a weak economy and inflationary pressures are likely to

push a rate cut from the Bank of Canada to provide some stimulus.

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Main risks to our scenarioThe high level of household debt is a significant source of vulnerability for the economy. Without question, household debt increases the economy's sensitivity shocks such as higher interest rates, a drop in income or a rise in unemployment, and could exponentially amplify the impact of that shock to the economy. This is why we think the BoC may be reluctant to provide further stimulus to the economy, as lower rates could fuel another debt binge. The current rebound in the housing market and mortgage lending, while still at a low level of activity, is likely to be closely monitored by the BoC. The high level of household debt could also lead the BoC to cut more forcefully in the case of a negative shock.

Looking at upside risks to our forecast, the cease-fire in the trade war between the United States and China could reduce the level of global uncertainty and restore growth in global trade, resulting in a resurgence in business investment. This, coupled with the amount of monetary accommodation put in place globally late last year, could have the potential to lead a quick rebound in global economic activity. The Canadian economy will feel the positive impact of such an outcome through the external sector and business investment. With the consumer sector and the labour market remaining strong, growth would rebound. In this scenario, we believe that the removal of the downside risks to growth would lead the Bank of Canada to restart normalizing monetary policy and to hike rates in late 2020.

The main downside risk to our forecast would be if the slowdown in the United States is more pronounced than expected, potentially leading to a recession. This would have the potential to push growth in Canada closer to zero and maybe into negative territory. If this were to be the case, the decrease in income associated with job losses would likely lead to increasing household defaults and further economic and job weakness. As mentioned above, the high level of household debt would probably make such a shock exponentially more damaging to the Canadian economy. In this case, significant cuts by the BoC would be necessary. Considering rates are already low, the room for further rate cuts is limited and the effectiveness of monetary policy would be challenged. This means that fiscal policy would need to play an essential role in stimulating the economy, and the choice of the stimulus (tax cuts, tax credit, increased spending, etc.) will matter, as they do not come with the same potency.

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Alberta to grow

# 0 4

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Alberta to grow faster than the country as a wholeThe Alberta economy continues to recover from the recession of 2015-2016 that was caused by the collapse in oil prices. However, while remaining positive, growth has slowed sharply since late 2018, dipping to 1.6% in 2018 after reaching 4.8% in 2017. We estimate that growth in 2019 was only slightly positive at 0.5%. The economic slowdown is, in large part, the result of the Alberta government curtailment of oil production to reduce the excess supply that has caused an unprecedented discount on Alberta oil to almost $50 a barrel. Continued high unemployment rates and stagnant wages have led to weaker consumer spending and a shrinking housing market, further holding back growth.

The weakness in the global economy and the uncertainty created by the trade war are also headwinds to the province's main exports, namely energy and agricultural products. The retaliation for the arrest of Huawei Chief Financial Officer through a ban on the imports of canola and meat has hit the agricultural sector in the province hard, while a slower global economy has weakened oil demand and kept prices low.

Some of those headwinds to growth are expected to disappear in 2020, while some are expected to remain. On balance, we believe that growth in 2020 will improve to reach about 2.0%. However, there are substantial risks to this outlook.

Oil sector: finally bottoming outAfter acting as a drag on growth in 2019, the oil and gas sector is expected to make a positive contribution to growth in 2020. The completion of the Canadian leg of Enbridge Line 3 pipeline, continued increase in the transportation of crude by rail and a further easing in the oil curtailment will allow higher oil exports and production next year.

The improvement in market access for Alberta oil should help keep the differential between WTI and Alberta's oil price benchmark WCS close to its average level of about $15 a barrel, boosting the profitability of oil producers. However, international benchmark price WTI is expected to remain around the current range, between $50 and $60 a barrel, as in 2019, as weak global demand and continued robust production increased by non-OPEC countries prevent oil prices from growing meaningfully.

Investment in the oil sector is expected to increase after one of the weakest years of activity in 2019. However, this improvement could be limited, given lackluster prices and continued concerns regarding future market access as some pipeline construction projects remain highly uncertain. As such, the Canadian Association of Oilwell Driller Contractors expect members’ activity to increase only marginally in 2020. Nevertheless, some big oil producers, like Suncor, Cenovus, Canadian Natural Resources, have plans to increase investment and production in 2020.


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F I G U R E 1 1 . A L B E R T A E C O N O M I C A C T I V I T Y ( % Y - O - Y )

S O U R C E : A L B E R T A T R E A S U R Y B O A R D A N D F I N A N C E

F I G U R E 1 2 . C A P I T A L E X P E N D I T U R E I N O I L A N D G A S E X T R A C T I O N S E C T O R

( C $ B N )


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2000 2003 2006 2009 2012 2015 2018

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2013 2014 2015 2016 2017 2018 2019

Thou

sand

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F I G U R E 1 3 . S P R E A D B E T W E E N W T I A N D W C S ( U S D )

S O U R C E : B L O O M B E R G

F I G U R E 1 4 . U N E M P L O Y M E N T R A T E ( % )


0

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2008 2010 2012 2014 2016 2018

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1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Canada Alberta


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Consumers and housing sector to remain hesitant Consumer spending grew at a meagre pace in 2019, held back by the high unemployment rate, stagnant wages and weak consumer confidence. With the economic environment improving modestly in 2020, we expect consumer spending to make only a marginal contribution to growth. With growth remaining weak, job gains will be modest, with a small improvement in the unemployment rate to bring it to 6%. The reduction in slack in the labour market will support wage growth, but should remain modest.

The activity in the housing market is expected to remain modest and underperform the rest of the country, held back by the same factors as consumer spending. Moreover, continued high inventories of unsold homes and weak population growth as interprovincial migration remain limited will likely continue to weigh on price gains. Still, we believe that the price declines seen this year should make place for some modest gains in 2020. These factors will also likely constrain residential construction in 2020 as well.

Government: spending restraint is the normIn its latest budget, the Alberta government announced a plan to reduce spending by about 2.8% over the three years, to return to a small budget surplus by FY2022-2023. The announcements contained in the budget drew heavily on the conclusions from the Mackinnon Report, which showed room for efficiency gains in delivering public services. Those measures translated into a freeze on program spending, mainly education and health care, and a shrinking of the public workforce. In addition, the government also announced the non-indexation of the income tax brackets and benefits, reducing the purchasing power of Albertans somewhat.

The government’s flagship announcement in the budget was the reduction of the corporate tax rate from 12% to 8%, with a cut of one percentage point per year, in an effort to spur business investment and hiring in the province. While low corporate tax creates an environment supportive for investment and hiring, there is a high level of uncertainty regarding whether businesses will take advantage of the tax cut or save the proceeds.

In early December, Moody’s downgraded Alberta’s credit rating to Aa2 from Aa1, citing “structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources — primarily oil." It also mentioned that “the government's fiscal projections are subject to material execution risk” and “will require sustained political discipline” to be reached.

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While a downgrade is never positive, the risks identified by Moody’s are fair. Considering the economic situation and the prudent approach to the budget, the government could not have done much more to prevent the downgrade without a complete overhaul of the revenue side of the fiscal equation. While not mentioned explicitly, the lack of diversification of the economy and continued heavy reliance on the oil and gas industry for growth and public finances were likely contributors to the downgrade.

RisksWe believe that risks to the outlook are relatively balanced. A rebound in global economic activity could push oil prices higher, leading to improved profitability and investment in the sector. Similarly, a supply shock, like production disruption in the Middle East, could have a similar impact. On the flip side, there is a risk that impact on growth of the spending cuts within the budget could be more negative on growth, especially if the corporate tax cut fails to stimulate business investment and hiring. Moreover, a recession in the United States or Canada would also affect Alberta. However, we feel the province may suffer less than the rest of the country as its economy already has adjusted to the negative shock in 2015-2016.

Growth in Alberta is expected to rebound in 2020, thanks to improvements in the

energy sector.

Disclaimer: The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any organization or person in any way affiliated with the author including, without

limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in

this publication should be construed as providing professional advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication.


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F O R E C A S T T A B L E : C A N A D A

F O R E C A S T T A B L E : A L B E R T A

% 1 Q 1 9 2 Q 1 9 3 Q 1 9 4 Q 1 9 1 Q 2 0 2 Q 2 0 3 Q 2 0 4 Q 2 0 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0

Real GDP 0 . 8 3 . 5 1 . 3 0 . 2 1 . 3 1 . 4 1 . 6 1 . 8 3 . 2 2 . 0 1 . 6 1 . 3

Personal consumption

2 . 5 0 . 5 1 . 6 0 . 5 1 . 2 1 . 2 1 . 2 1 . 4 3 . 7 2 . 2 1 . 5 1 . 1

Non residential fixed invest

1 8 . 0 -7. 0 9 . 5 - 5 . 0 0 . 0 0 . 0 1 .7 2 . 3 3 . 9 1 . 4 0 . 6 0 . 1

Residential fixed invest

-2 . 7 5 . 5 1 3 . 3 0 .7 2 . 5 2 . 5 1 . 8 1 . 5 2 . 2 -1 . 6 - 0 . 6 3 . 5

Government expenditures

3 . 6 0 . 8 1 . 8 1 . 8 1 . 8 3 . 0 3 . 0 2 . 0 2 . 7 3 . 2 1 . 9 2 . 1

Exports - 3 . 3 1 2 . 9 -1 . 5 -7. 6 3 . 0 1 . 9 2 . 6 3 . 0 1 . 4 3 . 1 1 . 4 0 .7

Imports 8 . 1 - 3 . 5 0 . 1 - 4 . 6 2 . 0 1 . 9 2 . 3 2 . 6 4 . 2 2 . 6 0 . 2 0 . 2

Contributions to GDP:

Domestic final sales

3 . 7 0 . 2 3 . 1 0 . 3 1 . 4 1 .7 1 . 8 1 .7 3 . 4 2 . 1 1 . 4 1 . 5

Inventories 0 . 9 -1 . 8 -1 . 3 0 . 8 - 0 . 3 - 0 . 2 - 0 . 2 0 . 0 0 . 8 - 0 . 2 - 0 . 2 - 0 . 3

Net trade - 3 . 7 5 . 1 - 0 . 5 - 0 . 9 0 . 3 0 . 0 0 . 1 0 . 1 -1 . 0 0 . 1 0 . 4 0 . 2

Unemployment rate 5 . 8 5 . 5 5 . 6 5 . 7 5 . 8 5 . 9 6 . 0 6 . 0 6 . 3 5 . 8 5 .7 5 . 9

Employment, 000 1 3 3 . 0 1 3 8 . 1 5 5 . 5 2 5 . 3 2 4 . 9 2 8 .7 3 6 . 4 4 4 . 2 3 3 6 2 3 8 3 8 9 1 5 7

Consumer prices 1 . 6 2 . 1 1 . 9 2 . 1 1 . 8 1 . 5 1 .7 1 . 8 1 . 6 1 . 6 1 . 9 2 . 2

Core CPI 1 . 6 1 . 9 1 . 9 1 . 8 1 .7 1 . 6 1 . 6 1 .7 1 . 1 1 . 1 1 . 2 1 . 4

Overnight target rate

1 . 7 5 1 . 7 5 1 . 7 5 1 . 7 5 1 .7 5 1 . 5 0 1 . 5 0 1 . 5 0 1 . 0 0 1 . 7 5 1 .7 5 1 . 5 0

3-month T-Bill 1 . 6 7 1 . 6 6 1 . 6 5 1 . 6 6 1 . 4 5 1 . 3 5 1 . 4 0 1 . 4 5 1 . 0 6 1 . 6 4 1 . 6 6 1 . 4 5

2-year government bond

1 . 6 7 1 . 6 6 1 . 6 5 1 . 6 6 1 . 4 5 1 . 3 5 1 . 4 0 1 . 4 5 1 . 0 6 1 . 6 4 1 . 6 6 1 . 4 5

5-year government bond

1 . 4 3 1 . 4 0 1 . 4 2 1 . 6 4 1 . 3 5 1 . 4 5 1 . 5 0 1 . 5 5 1 . 8 2 1 . 9 3 1 . 6 4 1 . 5 5

10-year govern-ment bond

1 . 6 2 1 . 4 6 1 . 3 7 1 . 7 0 1 . 3 5 1 . 5 0 1 . 6 0 1 .7 0 2 . 0 4 1 . 9 6 1 .7 0 1 .7 0

USD/CAD 1 . 3 4 1 . 3 1 1 . 3 2 1 . 3 0 1 . 3 3 1 . 3 7 1 . 3 7 1 . 3 5 1 . 2 5 1 . 3 6 1 . 3 0 1 . 3 5

% 2 017 2 01 8 2 019 2 0 2 0Real GDP 4 . 8 1 . 6 0 . 5 2 . 0

Unemployment rate 7. 0 6 . 4 7. 0 6 . 5

Employment, 000 5 5 2 1 -10 3 0

Wage growth 1 . 6 2 . 4 1 . 8 2 . 0

WTI 6 0 . 4 4 5 . 3 6 0 . 0 6 5 . 0

WCS-WTI Spread (average)

1 2 .7 2 6 . 3 1 3 .7 1 2 . 0

Note: shading denotes quarterly profile data.

Note: the GDP forecast are expressed as Quarter-on-Quarter (Q-o-Q) at annual rate. Consumer price forecasts are in % year-on-year. The interest rates and foreign exchange forecast are end of period.

2020 economic outlook - home - alberta central...economic co-operation and development’s (oecd)...

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