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Economic recovery underway, deficit steady

Alberta’s economy continued to pick up momentum in the first half of 2017, with gains in jobs, housing, exports and other areas.


The Alberta government now forecasts the economy to grow by 3.1 per cent in 2017, up from the budget forecast of 2.6 per cent, as detailed in the First Quarter Fiscal Update and Economic Statement. Most private sector and other forecasters expect Alberta’s economic growth to lead the provinces in 2017.

Alberta added nearly 17,000 jobs so far this year and employment is now forecast to grow by 1.3 per cent in 2017, up from 0.9 per cent forecast at budget.

The Alberta Activity Index, a weighted average of nine monthly economic indicators, climbed about five per cent through to May. Other positive economic indicators include:

  • The number of rigs drilling averaged 127 in the first seven months of 2017, doubling over the same period in 2016.
  • Housing starts through July increased 23 per cent from the same period 2016.
  • Non-energy exports were up 7.1 per cent in the first half of 2017 and reached the second highest mark on record in March at $2.9 billion.

“Our plan to support jobs and economic growth is working and we will continue to have Albertans’ backs as we regain the losses from the recession. There is good reason to feel optimistic about Alberta’s recovery and we will continue on the path to balance while supporting the needs of everyday Albertans.”

Joe Ceci, President of Treasury Board & Minister of Finance

Despite a recovering economy, the persistent effects of the downturn and a lower-than-expected oil price weighed on provincial revenue. This was partly offset by an improved light-heavy crude differential, along with higher revenue from Crown lease sales and investment income.

Government is addressing the revenue shortfall by using $250 million of the budgeted $500 million risk adjustment and targeting a further $200 million on top of the $200 million in savings proposed in Budget 2017. The forecast deficit is unchanged from budget at $10.5 billion.

“Our plan is clear and it is working – we will reduce the deficit over time by restraining growth in spending while protecting health care, education and the other services Albertans count on. The severe and reckless cuts proposed by others to take billions out of the budget this year would hurt Alberta, put people out of work and weaken the economic recovery.”

Joe Ceci, President of Treasury Board & Minister of Finance

2017-18 First quarter forecast ($ millions)

Full-year forecast

Budget 2017

Q1 forecast

Change from Budget

Income taxes

$15,095

$14,730

$(365)

Non-renewable resource revenue

3,754

3,377

(377)

Other revenue

26,173

26,267

94

Total revenue

45,022

44,374

(648)

Operating expense (net of in-year savings)

46,010

45,812

(198)

Climate Leadership Plan operating expense

868

768

(100)

Disaster/emergency assistance expense

235

213

(22)

Other expense

7,906

7,869

(37)

Total expense

55,019

54,662

(357)

Risk adjustment

(500)

(250)

250

Deficit

$(10,497)

$(10,538)

$(41)

Energy and economic assumptions

Budget 2017

Q1 forecast

Change from Budget

WTI (US$/bbl) *

55

49

(6)

Exchange rate (US¢/Cdn$)*

76

77

1

Real GDP growth (%)**

2.6

3.1

0.5

Unemployment rate (%)**

8.0

7.8

(0.2)

*2017-18 fiscal year **2017 calendar year

Three-month actuals ($ millions)

April 1 to June 30

Budget

Actuals

Change from Budget

Revenue

$11,564

$12,187

$623

Expense

14,989

14,594

$(395)

Deficit

$(3,425)

$(2,407)

$1,018


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