Alberta boom bottoms out
LACOMBE- Alberta's economy is expected to contract by nearly 2% in 2009, after years of robust growth, as the global recession tightens it's grip on the province.
The contraction will result in the loss of 15,000 jobs and a rise in Alberta's unemployment rate to 5.8%, according to Iris Evans, Minister of Finance and Enterprise.
"We have always said that Alberta is not immune to the global recession, but we believe with the economy we have, we are better positioned than anyone else," said Evans. "Plunging energy prices, unsettled international financial markets, a drop in demand for our exports and other effects of the global recession have put Alberta in a much different position than we were in, just six months ago."
Plunging oil prices and decreased export demands have taken their toll. Evans admitted the province will have to chip in $1 billion of extra cash, left over from 2008, to avoid being in the red - the first time Albertans could see a deficit in 15 years.
"Our economy relies heavily on the energy sector, and it has been hit by this slow down," said Lacombe-Ponoka MLA Ray Prins, who sits on the treasury board and has been watching the numbers drop off in recent months. "We are going to work hard at finding efficiencies and ways to keep our economy buoyant. We have some large savings we can draw on to help Albertans ride this out."
With the stock market tumbling, Alberta's Heritage Fund has lost 14% of its value - about $3 billion - and other rainy-day funds are down by about 16%, said the finance minister, which leaves the province is in a very different position compared to six months ago when an $8.5 billion budget surplus was projected.
"We are going to do what we can to maintain jobs, to have the right tools in place at the right time to help Albertans and businesses weather this downturn," said Prins. "The recession will affect different people in different ways.
"Certain sectors have been, and will be, harder hit than others but the government has a number of initiatives in place to help cushion the blow and keep our economy positioned to rebound."
The Alberta government's plan for weathering the storm includes keeping a close eye on government spending, drawing from its emergency savings, removing internal trade barriers, investments in green technologies, the elimination of health care premiums and maintaining low, competitive taxes.
The province will also continue to offer training support for people looking for work and offer assistance to industries hit hard by the slowdown.
Alberta's economy is expected to begin recovering in 2010 with modest growth. With low unemployment and inflation, a strong resource base, a competitive tax regime, an investments-friendly environment, significant financial assets, and a fiscal framework designed to deal with the ups and downs of volatile resource revenues, Evans said Alberta is well positioned for recovery.
And while critics are accusing the government of not reining in spending and not having any stimulus package to help Albertans who are hurting in the recession, Evans said the government is counting on Albertans themselves to fight against the economic downturn tide.
"As we emerge from these turbulent times, we will position Alberta to be the engine of the Canadian economy," she said. "The best response to the downturn is to stay true to the Alberta spirit, the entrepreneurial spirit that built this economy and this province. We're counting on that spirit to come through in the difficult year ahead."