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Alberta will lead the country in economic growth next year after falling behind the national average this year, Craig Wright, chief economist for RBC, told the audience during the presentation of his Market Outlook 2010 report on the provincial, federal and international economies.
Growth of investment in the energy sector combined with positive sales forecasts, stabilized pricing models and seasonal hiring needs will boost employment as the industry prepares for winter oil and gas production.
On June, TD Economics had already forecast that the province’s real gross domestic product growth will be 3.5 per cent in 2011 after a 2.8 per cent hike in 2010. It forecasts real GDP growth of 3.6 per cent this year and 2.5 per cent in 2011 for the entire Canadian economy.
Another report by Scotiabank said that Alberta will experience a sharp economic rebound during 2010 and it will lead all of the Canadian provinces in terms of GDP growth at 4.1%.
For 2011, Scotiabank is forecasting that Alberta’s economic growth will be 3.4 per cent while Canada as a whole will average 2.7 per cent.
A strong pickup in investment will fuel growth in the energy and manufacturing sectors,
“Investment has perked up in the oil sands, as easing costs and higher oil prices revived investment intentions in late 2009, with $2.2 billion in outlays scheduled for 2010 alone. Renewed activity in the industry will lead to significant benefits flowing through the economy, with manufacturing and services all heavily tied to conditions in the energy sector. While the bulk of investment will stem from oil sand development and tight oil plays, recent revisions to the province’s royalty framework are a major positive for the natural gas industry.”
The report also showed how the province has also made efforts to diversify its economy with the development of its health sciences industry. Notably, the Alberta Innovates initiative provides funding for a wide variety of domains, including health, energy and the environment.
Alberta’s economy is one of the strongest in Canada, supported by the petroleum industry and, to a lesser extent, agriculture and technology. According to the Fraser Institute, Alberta has very high levels of economic freedom. On its Canadian Provincial Investment Climate Report, Alberta continues to rank top setting the pace and leading the country in terms of creating and maintaining a positive investment climate. The report also claims that it is “by far the most free economy in Canada, and is rated as the 2nd most free economy of all U.S. states and Canadian provinces.”
Mortgages in Arrears statistics
The Canadian Bankers Association has recently released the Mortgages in Arrears statistics through December.
Worth noting that the previous record high in November for the province of Alberta has been surpassed , and is now sitting at 0.75% (up from 0.72% in November, and 0.40% a year prior).
For the whole of Canada the rate was up just slightly, now sitting at 0.45% (up from 0.33% a year ago).
Most of the other provinces fluctuated within a mere 0.01%, except Saskatchewan, where it climbed 0.02%, but is still a national low, 0.29% (up from 0.23% a year prior).
The Atlantic provinces continue to have the second highest rate (a distant second behind Alberta), sitting at 0.51% (up from 0.42% a year prior).
British Columbia continues their slow but steady climb, and sit at 0.40% as of December, up from 0.23% a year ago.
However, when viewed in perspective, it appears that the absolute number of arrears in Canada is still very low when compared to other countries, with less than 5 out of 1,000 Canadian mortgagors being late on payments.
Also, it must be taken into account that although there are 5,699 more borrowers in arrears than a year ago, 91,986 more mortgages have been processed during that same period, out of four million active mortgages in total. These numbers show that on an absolute basis, arrears have not been excessively high in Canada.
The single factor that has always most influenced the rate of mortgage arrears is employment, more even than rising interest rates.
The chart below from Will Dunning Economic Research illustrates the relationship between Canadian employment rate and the percentage of mortgage arrears:
As it can easily be seen, when employment goes up, arrears go down, and when employment goes down, arrears go up, which makes perfect sense. It isn’t very surprising that when mortgage takers are employed they have no difficulties honoring their debts and when there are more people employed there is a larger pool of people who qualify for mortgages.