The Conference Board of Canada is forecasting that the province of Alberta will fall into recession this year due to a slumping oil sector and China's move to block imports of Canadian agricultural products.
As recently as February, the Conference Board forecast that Alberta's economy would grow by 1.3% this year. However, it now expects the provincial economy to shrink by 0.1% in 2019.
The Conference Board points to the Alberta government’s decision to restrict oil production as one of the main reasons for its downgrade. Production restrictions boost profits for the Alberta energy sector, but it also results in less drilling activity and less spending by companies.
“Drilling investment will take a major tumble as producers have either delayed spending until times are more certain or they have shifted their capital to south of the border,” said the Conference Board of Canada in a new economic forecast report. "The effect on investment has been severe, and the Alberta economy is set to contract by 0.1% in 2019 — a mild recession, but a recession nonetheless."
The Conference Board forecasts Alberta to bounce back in 2020 with growth of 2.7% as new construction projects begin and oil production cuts are expected to be lifted.
