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EDMONTON — Slashed construction spending is pushing Alberta`s economy down its steepest economic slide in 17 years, says a new report from RBC Economics Monday.
The province`s real gross domestic product is forecast to shrink by 2.5 per cent in 2009 — just below the predicted national average decline and the third-biggest year-over-year fall by percentage in Canada, according to the RBC Economics Provincial Outlook.
"The plunge in energy prices from peak levels last year and elevated construction costs have thrown several capital projects off course in Alberta since last summer," said Craig Wright, senior vice-president and chief economist for RBC.
"Business capital investment has slowed considerably and weaker investment will weigh heavily on Alberta`s economic performance this year."
The report says prospects look grim this year in the energy sector, consumers are tightening their spending and the Alberta government is also cutting back.
More than half of the $130 billion in proposed oilsands projects was on hold at the end of April and the most recent provincial government budget calls for capital spending in that sector to be cut by half compared to 2008, said the report.
The bright side is that much of that decline might be over because a recent run-up in oil prices has sparked renewed interest in going ahead with construction, it said.
Housing starts are down 65 per cent year-over-year in the first five months and projected to hit a 13-year low for all of 2009 while retail sales plummeted by more than 10 per cent year-over-year in the first quarter.
Read the full article here.
The province`s real gross domestic product is forecast to shrink by 2.5 per cent in 2009 — just below the predicted national average decline and the third-biggest year-over-year fall by percentage in Canada, according to the RBC Economics Provincial Outlook.
"The plunge in energy prices from peak levels last year and elevated construction costs have thrown several capital projects off course in Alberta since last summer," said Craig Wright, senior vice-president and chief economist for RBC.
"Business capital investment has slowed considerably and weaker investment will weigh heavily on Alberta`s economic performance this year."
The report says prospects look grim this year in the energy sector, consumers are tightening their spending and the Alberta government is also cutting back.
More than half of the $130 billion in proposed oilsands projects was on hold at the end of April and the most recent provincial government budget calls for capital spending in that sector to be cut by half compared to 2008, said the report.
The bright side is that much of that decline might be over because a recent run-up in oil prices has sparked renewed interest in going ahead with construction, it said.
Housing starts are down 65 per cent year-over-year in the first five months and projected to hit a 13-year low for all of 2009 while retail sales plummeted by more than 10 per cent year-over-year in the first quarter.
Read the full article here.