High energy prices, together with increased production and investment in oil sands projects, mean Alberta should continue to lead the rest of Canada in economic performance over the next decade, according to a new paper from the BMO Financial Group Economics Department.
“Alberta’s stellar economic and fiscal fundamentals provide a solid base for future growth,” according to Rick Egelton, senior vp and chief economist, BMO Financial Group.
“Barring a collapse of energy prices, the province is poised to widen its economic and competitive lead against the rest of the nation,” Egelton said in a release.
The paper states that Alberta’s economy, measured in constant dollars, will grow 0.9 percentage points faster than Canada’s economy, on average, between 2005 and 2015.
“Living standards, already the highest in the nation, will increase dramatically,” said Egelton. “Alberta’s nominal GDP per capita will increase from the current 45% above the national level to 55% by 2015.”
Alberta’s industries will almost all share in the province’s prosperity. “Several industries, including oil & gas extraction, business services, retail trade, construction, accommodations and food services, will outperform their national counterparts,” noted Egelton.
BMO Economics said Alberta’s economic strength will result from the net impact of five major forces:
- relatively high energy prices;
- increased output from the oil sands;
- decreased conventional energy production;
- heavy capital expenditure in the oil sands;
- high population growth.