Alberta economy forecast to grow despite global turmoil: ATB report

A Canada flag, left, and an Alberta flag flap in the breeze with Wedge Mountain in the background at the site of the G7 Leaders meeting in Kananaskis, Alta.THE CANADIAN PRESS/Jeff McIntosh

Alberta’s economy is expected to outperform much of the country this year despite a turbulent global backdrop, according to a new quarterly outlook from ATB Financial – though economists warn the gains may not be evenly felt by households and businesses.

The report forecasts real GDP growth in Alberta of 2.7 per cent in 2026, an upward revision from a previous estimate of 2.1 per cent, even as global conflict and trade uncertainty weigh on the broader Canadian economy.

“There is a lot going on out there in terms of what’s affecting the Alberta economy, but the big picture number — our overall GDP growth — is positive,” said Rob Roach, deputy chief economist with ATB.

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Roach cautioned, however, that while the headline number points to economic expansion, it does not necessarily reflect the experience of individual households.

“That provides a general direction for the economy, it doesn’t translate into a map for every household and business; but that general direction is definitely positive.”

Nationally, ATB has downgraded its forecast for Canadian growth to 1.3 per cent this year, reflecting weaker recent data and growing uncertainty tied to global instability, including conflict in the Middle East and disruptions to key shipping routes.

Global energy shock reshapes outlook

A major driver of the revised outlook is a global energy shock linked to conflict in Iran, and the blocking of the Strait of Hormuz, which is a critical artery for global oil shipments.

Richard Masson, former CEO of the Alberta Petroleum Marketing Commission, described the situation as unprecedented in scale.

“It’s the biggest energy disruption that’s ever happened in the world,” he said, noting roughly 15 per cent of global oil supply has been affected.

“The crisis is compounding each day that this goes on.”

The disruption has pushed oil prices higher, boosting revenue expectations for Alberta’s energy sector and government coffers.

ATB projects nominal GDP — which measures the value of economic output — will rise by about six per cent this year, a sharp increase from earlier forecasts.

Masson said higher prices translate directly into increased income for producers and governments.

“The companies who are producing the oil, they’re going to make much more money for every barrel they produce, so that’s going to translate into higher taxes and royalties for provincial governments,” he said.

However, both Masson and ATB economists stress this is not a traditional boom.

Investment in new production remains constrained by infrastructure limits and uncertainty around how long elevated prices will last.

Even with strong prices, companies are hesitant to significantly expand output without clearer access to markets.

“There is no spare capacity that sits in North American production,” Masson said.

“The ability for us to increase production takes minimum months, but for oilsands projects, often years.”

At the same time, higher oil prices carry downsides for consumers.

Roach said while the province benefits from increased revenues, the ripple effects can push up costs across the economy.

“We will be feeling that at the gas pumps – and it’s also higher transportation costs, higher fertilizer costs – so we’re going to start to feel it at the grocery store and in other ways.”

“That could really push up inflation again.”

Labour market rebalancing amidst challenges

Beyond energy, Alberta’s labour market is undergoing a period of adjustment following years of rapid population growth.

The province is expected to see employment growth of about 3.1 per cent this year, helping bring the unemployment rate down to 6.4 per cent from 7.2 per cent in 2025, according to ATB.

At the same time, population growth is slowing as federal policies reduce the number of non-permanent residents entering the country.

Roach said Alberta still holds an advantage compared to other provinces.

“Our population growth has slowed, but it’s still continuing and actually still quite strong,” he said.

“We are still getting a lot of people coming to Alberta on a net basis from other parts of the country.”

That continued migration is helping sustain the labour pool, even as businesses adjust to a smaller influx of temporary foreign workers.

On the ground, however, the job market remains complex.

Sharlene Massie, CEO of About Staffing, said both employers and job seekers are navigating uncertainty, leading to a more cautious hiring environment.

“We had a lot of candidates applying and not a lot of jobs for them, which was difficult, but today it’s a little bit different,” she said.

“We have less candidates that are qualified, less jobs that are available as well, so it’s just a lighter market.”

Massie says employers are hesitant to hire amid ongoing global instability, while job seekers are often selective about opportunities, creating a mismatch in the labour market.

She added that temporary positions are becoming more common as companies test hires before committing to permanent roles.

“Temporary is booming, actually,” she said.

“So maybe an open mind in the world of temporary employment is a good thing.”

Although youth employment remains a particular concern, with significantly higher unemployment rates among younger workers.

“It’s a difficult scenario right now for everyone — employers and employees. It’s very tough,” Massie said.

Trade uncertainty and diversification efforts

While global conflict has taken centre stage, trade tensions with the United States continue to pose risks.

ATB notes that tariffs have had a smaller impact than initially feared, largely due to exemptions under the Canada-U.S.-Mexico Agreement (CUSMA).

However, the agreement is up for review later this year, adding another layer of uncertainty.

Roach says maintaining those exemptions will be critical.

“That’s what’s been shielding us from the worst effects of U.S. trade policy,” he said.

At the same time, Alberta is making progress in diversifying its export markets, particularly in energy.

New infrastructure has enabled increased shipments of oil, propane and liquefied natural gas to Asia, reducing reliance on the United States.

“The reason that’s positive is it gives us a second customer,” Roach said.

“It gives us a little bit more leverage.”

Masson said this shift could become even more important as global supply chains evolve in response to geopolitical instability.

“There are very few places where you can get oil reliably,” he said.

“Canada is the fourth-largest producer in the world and we’re going to have a responsibility to step up.”

Growth outlook positive, but risks remain high

Despite the relatively strong outlook, economists emphasize that risks to the forecast remain elevated.

ATB’s report highlights the potential for further global disruption, particularly if the energy crisis deepens or trade conditions worsen.

Roach says while Alberta is positioned to grow faster than the national average, the path forward is far from certain.

Even with economic growth, many households are still grappling with the lingering effects of inflation and high interest rates.

“This is still going to be tough for a lot of households and businesses, but the fact that the economy overall is growing, that’s the right direction,” Roach said.

Massie echoed that sentiment from the labour market perspective, noting that improvement may take time.

“I’m hoping that when the world settles down a little bit, the unemployment rate will drop,” she said.

For now, Alberta’s economy appears to be holding steady, buoyed by energy revenues and population growth, but complex mix of global pressures and local challenges could shape its trajectory in the months ahead.