The world has changed dramatically since Budget 2020. Prior to March, there were encouraging signs of an economic turnaround in Alberta. This changed abruptly when the dual impacts of the COVID-19 pandemic and a collapse in oil prices began to affect Alberta directly.
Download: 2020-21 First Quarter Fiscal Update and Economic Statement (PDF, 949 KB)
Pandemic and low oil prices have dramatic effect
In February 2020, global economic growth was expected to pick up and Alberta’s economy was beginning to expand. The Alberta Activity Index (a measure of economic activity in the province) had grown by 2% over the previous year.
COVID-19 and the severe decline in oil prices dealt a serious blow to the provincial economy in March and April, resulting in historic job losses and a sharp drop in business activity and consumer spending.
As a result, Alberta’s economy (measured by real Gross Domestic Product, or GDP), is expected to contract by 8.8% in 2020. Government expects this decline to be followed by a partial rebound of 4.6% in 2021.
Chart 1. Key Alberta economic indicators, 2020
Alberta’s slow recovery begins
Alberta began to ease public health measures in May, and recent indicators suggest that economic activity is beginning to recover in some sectors. Although substantial government support has helped mitigate the impact of the pandemic, Alberta’s economy will see a severe contraction this year.
- real GDP is expected to contract by 8.8%, the largest annual decline in Alberta in recent history
- employment is forecast to fall by a record 7.0%
- the unemployment rate is expected to average 11.6%
The pace of Alberta’s recovery is expected to be gradual. Consumers may be slow to resume regular activities and government expects oil prices to remain low, hampering a recovery in the energy sector.
In 2021, real GDP is expected to see a partial rebound of 4.6% and employment will continue to recover; however, Alberta’s economy is not expected to fully recover until after 2021.
Key energy price and economic assumptions
Table 1. Energy price assumptions
|Fiscal year||2019-20 Actual||2020-21
3 Month Actual
|WTI Oil Price (US$/Barrel)||54.85||27.85||58.00||35.60|
|Light Heavy Differential (US$/Barrel)||14.82||11.47||19.10||12.50|
|Natural Gas (Alberta Reference Price Cdn$/GJ)||1.39||1.62||1.70||1.90|
Table 2. Economic assumptions
|Calendar Year||2019 Budget||2019 Actual||2020 Budget||2020
(% change in Real GDP)
|Unemployment Rate (%)||6.9||6.9||6.7||11.6||6.0||9.5|
More budget information
A plan to get Albertans back to work, make life better and stand up for Alberta.
Revenue projections from taxes, transfers, investment income and resources.
Budget 2020 invests in the infrastructure families and communities need.
Budget 2020 continues to optimize Alberta’s tax system.