COVID-19 Updates: Protecting Albertans from the Omicron variant.
According to the mid-year update, the province continues to see strong improvements in the economy, confirming that Alberta’s Recovery Plan to support job creation and broaden the economy is working.
Drilling activity and oil production have increased while business output remains solid, with manufacturing shipments and non-energy exports up more than 20 per cent year-to-date. Housing activity and retail spending also continue to be robust. Private sector construction spending is also picking up and employment will continue to improve.
Alberta has gained more than 103,000 jobs since the start of the year. According to the October jobs report, the unemployment rate fell to 7.6 per cent. Overall, it is forecast to average 8.8 per cent this year, down from 11.4 per cent in 2020. It is forecast to drop to 5.7 per cent in 2024.
The Job Creation Tax Cut and continued efforts to make Alberta the most competitive business environment in North America are working. Corporate income tax revenue of $2.9 billion is forecast for 2021-22, $1 billion more than what was forecast in February’s budget. This revenue is now forecast to increase by an average of 19 per cent over the next two years to reach $4.1 billion in 2023-24 as growth in investment and profits continue.
“Our persistent focus on attracting new investment and improving competitiveness for our key sectors is making a difference. We are seeing billions of dollars of new investment and capital deployed in the province, and its happening in hydrogen, tech, aerospace, petrochemicals and many other areas. As we maintain responsible fiscal management, Alberta will reap the rewards of a more stable and prosperous future.”
Alberta’s updated forecasts show that real gross domestic product (GDP) is expected to grow by 6.1 per cent this year, which is significantly higher than the 4.8 per cent forecast released at the start of the year.
While economists and researchers have downgraded economic projections for all provinces over the past several months, many forecasters, including the Conference Board of Canada and several major banks, predict that Alberta will lead the nation in economic growth into 2022.
These economic improvements, particularly in the energy sector, are driving a surge in the provincial government’s revenue. At the same time, the government is largely holding the line on spending. This year’s deficit is now expected to be $12.4 billion less than estimated in the budget.
Amidst the ever-present volatility of energy prices and resource revenue, Alberta’s government is committed to three fiscal anchors to guide decision-making:
- Keeping net debt below 30 per cent of GDP.
- Aligning per capita spending with comparator provinces.
- Balancing the budget and setting a time frame for doing so once the government has a clear picture of the long-term global impacts of the pandemic.
- The deficit for 2021-22 is forecast at $5.8 billion. This is $12.4 billion lower than the budget estimate and $1.9 billion lower than the first quarter fiscal update.
- Total revenue in 2021-22 is forecast at $57.9 billion, $14.2 billion higher than the budget estimate and $2.9 billion higher than the first quarter fiscal update.
- Total expense is forecast at $63.7 billion, $1.8 billion higher than the budget and $1 billion higher than the first quarter fiscal update, after adding $1.4 billion to the disaster contingency fund to account for the extreme drought conditions experienced by our agriculture sector.
- Taxpayer-supported debt is forecast to be $101.6 billion on March 31, 2022, $9 billion lower than budgeted and $4.1 billion lower than forecast in the first quarter fiscal update.
- The net debt-to-GDP ratio is estimated at 19.2 per cent at the end of the fiscal year, meaning the province is living up to its commitment to keep net debt well below 30 per cent of GDP.