Alberta's economy slower, but still better than rest of Canada: TD economist

Alberta is facing a slowdown in growth, but it's still doing better than the rest of Canada, according to Don Drummond, the senior vice-president and chief economist of TD Bank.

Drummond delivered an economic outlook on the year ahead at a luncheon hosted by the Edmonton Chamber of Commerce on Tuesday.

Drummond expects Alberta to have a growth rate of 1.8 per cent this year, and 2.5 per cent next year, a drop from the annual rate of five to six per cent a couple of years ago.

"But if you feel badly about that, consider the rest of Canada because the rest of Canada got 0.4 per cent, led by the weakness in central Canada, with a weak manufacturing sector," Drummond said.

"I think Alberta and the rest of Canada will do a bit better next year but probably in the case of Alberta only back to [growth of] about two and a half per cent. But that's consistent with what I said last year. A slowdown in growth but not a bust."

A more diversified economy and a large public sector will allow Edmonton to post stronger growth numbers than the provincial average, Drummond predicted, 2.7 per cent for 2008 and 3.1 per cent for 2009.

"And Calgary, slightly behind that within the same type of range. Again, both dramatically outperforming the averages across Canada," he said.

Last year, Alberta was the only province in Canada that experienced growth in wages and the consumer price index that exceeded the national average.

"Single-handedly, it was totally shaping the national average. You can see that that is gone. In fact, the wage growth has moderated quite a bit over the last year in Alberta and it's now just running slightly above the Canadian level, " Drummond said.

On the issue of housing, Drummond said every area in Canada is experiencing a balanced housing market. He told CBC News that a drop in prices in Alberta is due more to a greater supply of houses for sale than a weakening of the economy.

All this contributes to a slowdown in growth and not a bust.

Drummond says busts have almost always been precipitated by a collapse in prices of oil and natural gas, and he doesn't see that happening in the commodity-dependent Alberta economy with the current level of world demand, which is being driven by emerging economies like China's.

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