Overview

The economic landscape has changed significantly since Budget. Russia’s invasion of Ukraine in late February and resulting disruptions and sanctions against Russia have propelled energy prices. This has boosted revenues and activity in the energy sector. Business output has also seen strong growth amid robust demand and prices. The Alberta Activity Index, a measure of provincial activity, is up 6.2% year-to-date, led by energy and general business activity.

Economy to fully recover this year

Soaring commodity prices and ongoing supply disruptions, however, have exacerbated inflationary pressures for businesses and households, not just in Alberta but globally. Central banks in Canada and around the world have raised interest rates at an aggressive pace in order to quell inflation. The combination of high inflation, faster interest rates hikes and geopolitical instability has dampened the global outlook and increased economic uncertainty. These factors are weighing on consumer sentiment and spending on goods in Alberta. However, a strengthening labour market, pickup in population growth and pent-up demand for services from the pandemic are supporting household activity.

After growing an estimated 5.1% in 2021, Alberta’s real gross domestic product (GDP) is now forecast to grow 4.9% this year, down from 5.4% at Budget. The downward revision reflects expectations of softer growth in real consumer spending and residential investment. Even so, real GDP is expected to fully recover from the COVID-19 downturn and surpass the 2014 peak for the first time this year. Moreover, incomes – as measured by nominal GDP – are forecast to grow 24% in 2022, significantly higher than Budget. This will boost provincial government revenues.

Table 1. Energy price and currency assumptions

Source: Treasury Board and Finance
Fiscal year 2021-22 Actual 2022-23 Forecast 1st Quarter
WTI oil price (US$/barrel) 77.03 70.00 92.50
Light heavy differential (US$/barrel) 13.56 14.30 19.20
Exchange rate
(US cents/Cdn$)
79.8 79.0 77.4

Table 2. Economic assumptions

Source: Treasury Board and Finance
Calendar year 2021 Actual 2022 Q1 Forecast 2023 Q1 Forecast
Economic growth
(% change in real GDP)
5.1 4.9 3.2
Employment
(% change)
5.1 5.3 3.1
Unemployment rate (%) 8.7 5.9 5.5

Budget documents

More budget information

Find out what Budget 2022 means for you.

Revenue projections from taxes, transfers, investment income and resources.

Budget 2022 invests in the infrastructure families and communities need.

Summary of government spending according to Budget 2022.