Download: 2018-19 First Quarter Fiscal Update and Economic Statement
Published August 31, 2018 (PDF, 612 KB)

See below for economic outlook highlights from the publication.


Alberta’s economic recovery remains on track through the first half of the year, with 2.7% real GDP growth projected for 2018, unchanged from Budget 2018.

In 2019, strong exports, improving investment and continued population and earnings growth are expected to support real GDP growth of 2.7%, up from the 2.5% forecast at budget.

Despite the solid outlook for Alberta’s economy, there is heightened uncertainty about US trade policies and the impact they may have on growth and investment. While Alberta’s exposure to recently announced trade tariffs is smaller than a number of provinces, a potential escalation of trade actions poses some risk to the economic outlook.

Oil prices strengthen

Rising global oil demand and tightening supply, due to heightened geopolitical risks, have driven oil prices higher.

Three months into the fiscal year, West Texas Intermediate (WTI) crude – the North American benchmark oil price – has averaged about $68 USD per barrel. Alberta’s Western Canadian Select (WCS) has shared in the price increase, averaging just under $50 USD per barrel in the first quarter.

However, ongoing pipeline constraints and increased oil sands production have widened the light-heavy price differential and caused the WCS price to experience more volatility than WTI prices.

Exports driving recovery

Growing exports are leading Alberta’s economic recovery in 2018. Through the first 6 months of the year, international merchandise exports are up 11% compared to the same period in 2017.

Chart 1: Alberta business indicators ($ Billions)

Chart 1: Alberta business indicators ($ Billions)
Source: Statistics Canada

Oil prices have played a significant role, but non-energy exports are also near all-time highs, with volumes up by about 8% over the first half of 2017.

Real exports are forecast to grow by 4.9% in 2018 and 3.7% in 2019.

Corporate earnings improve

With higher-than-expected oil prices and economic momentum, Alberta producers are seeing greater returns than estimated in Budget 2018. Corporate earnings are now forecast to rise by 31%, up 12 percentage points from budget estimates.

Exporters are benefitting from a weaker-than-expected Canadian dollar, which has averaged $0.77 USD/CAD through the first 4 months of the fiscal year—nearly 3 cents lower than forecast at budget.

The 2018 exchange rate forecast has been lowered to $0.78 USD/CAD in the first quarter update.

Energy investment looking up

With improving corporate profits, energy investment prospects are beginning to shift. The number of rigs drilling in Alberta jumped by 20% in July compared with last year and are averaging nearly 7% higher year-to-date.

As a result, conventional investment is expected to rise by about 9% in 2018, almost entirely offsetting the decline in non-conventional investment. Modest growth in oil sands investment is expected in 2019, which would be the first year of growth since 2014.

Along with a continued increase in conventional investment, oil and gas investment growth is expected to drive overall business investment 3.2% higher in 2019.

Labour market advancing

Alberta’s labour market continues to improve. While employment growth has moderated, earnings have picked up.

Employment growth has been revised from 2.0% at budget to 1.9%, and the unemployment rate is forecast slightly lower at 6.7%, due in part to slower growth in the number of people joining the labour force.

Chart 2: Cumulative change in Alberta employment since trough (June 2016)

Chart 2: Cumulative change in Alberta employment since trough (June 2016)
Source: Statistics Canada

Household earnings are forecast to be stronger than expected at budget, with the majority of year-to-date employment coming from the higher-earning goods sector and full-time employment.

Average weekly earnings growth for 2018 is now forecast at 2.7%, up from 2.4% at budget. This strength is anticipated to carry into 2019, with primary household income climbing by 4.7%.

Chart 3: Year-over-year change in Alberta average weekly earnings

Chart 3: Year-over-year change in Alberta average weekly earnings
Source: Statistics Canada

Consumer prices climb

Rising energy prices and a lower Canadian dollar are driving up consumer prices across Canada. Gas and electricity prices have lifted Alberta’s consumer price index (CPI), leading to a revised forecast for 2018 inflation—up 0.2 percentage points from budget to 2.3%.
As the impact of these temporary factors subsides, inflation is expected to ease to 1.9% in 2019.

Pace of household spending eases

Rising costs, tighter mortgage regulations and climbing interest rates are weighing on household spending. Through July, there has been an average of 1,100 fewer housing starts (annualized) than in 2017—leading to a small downward adjustment of 2018 housing starts.

While retail sales are at a record high, growth in consumer spending has been slower than anticipated, especially on durable goods such as motor vehicles. This is expected to pick up in 2019 as housing activity rises and employment and wages continue to climb.

Economic and energy price assumptions

Fiscal Year 2017-18
3 Month Actual
1st Quarter
WTI Oil Price
53.69 67.88 59.00 61.00
Light Heavy Differential
14.40 19.27 22.40 24.00
Natural Gas
(Alberta Reference Price Cdn$/GJ)
1.82 0.93 2.00 1.70
Exchange Rate
(US cents /Cdn$)
78.0 77.5 80.0 78.0
Source: Alberta Treasury Board and Finance


Calendar Year 2017
Economic Growth
(% change in Real GDP)
4.9* 2.7 2.7
(% change)
1.0 1.9 1.7
Unemployment Rate
7.8 6.7 6.1
Source: Alberta Treasury Board and Finance; * - estimate


Read the 2018-19 First Quarter Fiscal Update and Economic Statement (PDF, 612 KB).