October 6, 2008

CanaData Annual Construction Industry Forecasts Conference

Alberta continues to drive Canadian economy

VINCE VERSACE

staff writer

Booms do not always go bust and though Western Canada’s economic explosion is slowing down, it remains the main driver in the nation’s economy, says a Canada West Foundation official.

“There is no question the bloom is off the Alberta rose,” said Roger Gibbins, president and CEO of the Canada West Foundation. “Some of the steam is going out of the Alberta economy.”

Gibbins spoke at the recent CanaData conference and said that too often the focus has been on Alberta when it came to talks of “booms” when all of Western Canada was part of that wave.

“The breadth of that prosperity, to note, is really across the entire west,” said Gibbins. “It is not just an Alberta phenomenon but a regional phenomenon.”

With $90 billion worth of oilsands projects in gear and $150 billion in the queue, the strength of the region’s economy is sustainable, but there are signs the boom phase is over.

Gibbins pointed to housing prices in Calgary falling by eight per cent, with new home building being down by 68 per cent over last year. Also, Alberta, for the first time, is becoming a net exporter of people, all indicators that things are settling down in the region.

The basics of supply and demand factored with global factors may point to an “enduring structural change” in the central power base of the Canadian economy, which impacts Canada as whole, explained Gibbins.

“What is happening in the west is important in particular because of what is happening in Ontario,” said Gibbins.

For decades Ontario was the core strength in Canada’s economy, providing up to 40 per cent of the nation’s GDP. However, global competitiveness and the struggles of the United States economy are hurting Ontario. At the same time, global demands, for oil in particular, are benefiting Western Canada and the region will begin to pull more investments from other Canadian regions.

“The structural change (in Canada’s economy), I think, is happening and it will pose difficult challenges for the economy,” said Gibbins. “It is just more troubling if two regional economies are going in different directions.”

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