Overview

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

Key Alberta economic indicators, 2020
Source: Treasury Board and Finance

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.

In 2020:

  • 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

Source: Treasury Board and Finance
Fiscal year 2019-20 Actual 2020-21
3 Month Actual
2020-21 Budget 2020-21
1st Quarter
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$/GJ) 1.39 1.62 1.70 1.90
Exchange Rate
(US cents/Cdn$)
75.2 72.2 76.5 73.0

Table 2. Economic assumptions

*estimate
Source: Treasury Board and Finance
Calendar Year 2019 Budget 2019 Actual 2020 Budget 2020
1st Quarter
2021 Budget 2021
1st Quarter
Economic Growth
(% change in Real GDP)
0.3 -0.6* 2.5 -8.8 2.8 4.6
Employment
(% change)
0.5 0.5 1.4 -7.0 2.1 4.3
Unemployment Rate (%) 6.9 6.9 6.7 11.6 6.0 9.5

Budget documents

Budget 2020 Fiscal Plan (PDF, 6.7 MB)

Budget 2020 Highlights (PDF, 1.7 MB)

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.