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Overview

Alberta economic prospects remain solid, but risks are increasing. Persistently high inflation, aggressive interest rate hikes around the world and ongoing geopolitical uncertainty are slowing the momentum in the global economy. Commodity prices have retreated from elevated levels seen earlier this year amid heightened concerns of a global recession. Even so, Alberta’s economy is positioned well to weather the challenges. Oil prices have softened but remain robust, boosting revenues and activity in the energy sector. Exceptional growth in non-energy business output has also bolstered export revenues and corporate profits, while investment intentions continue to be strong. Alberta’s housing market is faring much better compared to the rest of the country, buoyed by solid migration and low inventories. The Alberta Activity Index, a measure of provincial economic activity, is up 6% so far this year.

Economy continues to grow

After rebounding 4.8% in 2021, Alberta’s real gross domestic product (GDP) is now forecast to grow 4.8% this year. This is down 0.1 of a percentage point and 0.6 percentage points from the first quarter and budget, respectively. The downgrade reflects weaker sentiment and softer consumer spending as a result of faster interest rate hikes, persistently high inflation and lagging wage growth. Weaker renovation spending and a pullback in resale housing activity are also weighing on residential investment, although housing starts have remained strong. Despite softer growth, real GDP is set to fully recover from the COVID-19 downturn and surpass the 2014 peak this year. At the same time, incomes in the province remain strong and will support provincial government revenues. Nominal GDP – a broad measure of income – is forecast to grow 24% in 2022, buoyed by record high corporate profits and solid household income growth.

Table 1. Energy price and currency assumptions

Source: Treasury Board and Finance
Fiscal year 2021-22
Actual
2022-23
Budget
2022-23
Mid-year
(2nd quarter)
2023-24
Forecast
2024-25
Forecast
WTI oil price
(US$/barrel)
77.03 70.00 91.50 78.50 73.50
Light heavy
differential
(US$/barrel)
13.56 14.30 19.80 18.10 16.10
Exchange rate
(US cents/
Cdn$)
79.8 79.0 75.2 76.3 78.2

Table 2. Economic assumptions

Source: Treasury Board and Finance
Calendar year 2021
Actual
2022
Q2 Forecast
2023
Forecast
Economic growth
(% change in real GDP)
4.8 4.8 2.7
Employment
(% change)
5.1 5.2 2.4
Unemployment rate (%) 8.7 5.8 6.0

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.