Calgary economy slowing, but expected to weather global economic turmoil: CED
Mario Toneguzzi, Calgary Herald
Published: Monday, September 15, 2008
CALGARY - Calgary's economy is hitting the brakes from the breakneck speed of years past, but fundamentally the city's economy is in good shape, says Calgary Economic Development.
Adam Legge, the organization's vice-president and chief economist, told about 1,000 people attending CED's 2009 Calgary Economic Outlook on Monday that Calgary's economy is not faltering despite a slowdown and the economic turmoil currently gripping the world.
"Our economy was cruising at highway speed (in 2005 and 2006) and we saw everything around us going by very quickly," says a report authored by Legge about the city's economic outlook in the next two years. "Now in 2008, and in 2009, our economy is slowing. We have come back to the normal and sustainable economy that is fundamentally strong yet feels a lot slower than we were just 24 months ago."
The report forecasts total population growth of 19,000 to 21,000 in 2009 falling from the estimated 22,950 this year and the highs of 35,681 in 2006 and 28,183 in 2007.
Employment growth is forecast to rise by 1.8 per cent to 2.2 per cent next year. It is estimated at 2.3 per cent in 2008.
The unemployment rate is expected to be between 3.2 per cent and 3.5 per cent in 2009, up from the estimated 3.2 per cent this year.
And the CED is forecasting the inflation rate to be 3.2 per cent to 3.5 per cent next year, down from the estimated 3.8 per cent in 2008.
Housing starts will take a hit, dropping to between 8,000 to 9,000 in 2009, down from an estimated 12,200 this year.
And so will building permit values decline to about $4 billion to $4.5 billion next year from the estimated $4.75 billion in 2008.
According to the CED, Calgary's real gross domestic product is forecast to slow to 2.8 per cent to 3.3 per cent in 2009, down from the estimated 3.6 per cent this year.
The report said several factors are causing people in the city to feel worried or concerned, including slower job growth, retreating house prices, slowing retail sales, economic woes in Central Canada, U.S. and global economic slowdown, stock market volatility and lower oil and gas prices. And all of these have the potential to negatively impact the economy.
"The economy feels slower, because it is," said the report. "It was operating at an unsustainable level and now, at a more sustainable level, it is slower. But that is not cause for concern, despite what headlines may wish you to believe.
"We just have to teach our brains that our economy is not cruising at high speed and to put some of the conditions into perspective. Many of these are just rebalances back to equilibriums and sustainable levels."
But the CED report said the fundamentals of Calgary's economy are strong. They include healthy job growth, high average weekly earnings, inflation moderating, continued construction, and continued investment in long-term projects.
Legge, in the report, also identifies a few pressure points that have the potential to "exert a brake on the economy." Those pressure points are the residential real estate market continuing to cool, depressed gas prices and the implementation of the new Alberta royalty structure which takes effect Jan. 1, 2009.
mtoneguzzi@theherald.canwest.com

© Calgary Herald 2008