A chief economist says five economic trends to watch for relate to pipelines, consumer debt, international trade, crude oil and artificial intelligence.
Todd Hirsch, chief economist for ATB, was speaking to the more than 100 members of the St. Albert and District Chamber of Commerce on Feb. 14 about the state of the economy.
While crude oil has been Alberta’s primary economic driver, Hirsch said it needs to become the backbone of the economy, rather than the engine. This means turning attention to other industries, such agriculture, to build the economy.
Hirsch said the Canadian economy grew by three per cent in 2017, almost double what economists were projecting in the beginning of last year. The U.S. economy improved, which contributed to the growth felt in Canada.
Some of that has carried into 2018, but Hirsch expects the economy to stabilize rather than continue upwards.
He said he’s expecting a GDP growth of 2.8 per cent this year, and 2.2 per cent in 2019.
When it comes to pipelines, Hirsch said he expects the conflict over the Trans Mountain pipeline and Keystone XL pipeline to continue throughout 2018.
On households, the ratio between household debt and household income was considered a record-high in 2014, but those numbers have only gotten worse.
“Today we’re at an even higher all-time record debt-to-income ratio,” he said.
In 2014 debt servicing costs were lower for most households than they were a decade ago, which helped Albertans manage a high level of debt.
He said time is rapidly running out for people to get their debt levels under control, since the Bank of Canada has increased rates and could do so a couple more times this year.
As a result, Hirsch said he expects a minority of Albertans to file for bankruptcy over the next two years.
Turning attention to trade, Hirsch said he expects the U.S. to walk away from NAFTA. He said the country has put forward unrealistic expectations in revising the agreement, adding that the negative U.S. attitude towards the agreement is mostly aimed at Mexico.
He added that the Trans Pacific Partnership is a positive direction for Canada, adding that Alberta needs to focus on diversifying its trading partners. The U.S. is currently Canada’s largest trading partner.
Artificial intelligence is another aspect Hirsch sees growing in the next year. Hirsch said the rise of artificial intelligence will eventually impact the labour force.
According to the Conference Board of Canada, around 40 per cent of Canadian jobs will be impacted by artificial intelligence by 2030.
“It’s important to note that they said ‘affected’, not eliminated,” he said. “Some of those jobs affected could mean improved.”
Hirsch said robotics will improve the workforce for many employees. The caveat to the word ‘affected’, he said, could also mean some jobs could be replaced by artificial intelligence.
But where that happens, there are other opportunities that arise. Historically innovation has always changed the workforce and artificial intelligence is no different.
Hirsch said means there will be new jobs and new industries created alongside the new technology.
With Alberta being the youngest and most entrepreneurial province in Canada, Hirsch said he feels the province will adapt well with artificial intelligence.
Jennifer McCurdy, president and CEO of the St. Albert and District Chamber of Commerce said that she agreed with Hirsch on Alberta’s entrepreneurial spirit, adding that St. Albert is a business-minded community.
“St. Albert is right up there,” she said.
Although Albertans are still working through the impacts of the recession, Hirsch said it is time for people to stop talking about the recession and look ahead instead of behind. He said the recession was undoubtedly painful for many and will stand in history as an economic low point. Future recessions will most likely be measured against it.
McCurdy said his point about moving forward will resonate with many residents. While the city has been mostly sheltered from the recession, the impacts have still been felt within St. Albert.