Economic commertary provided by Alberta Central Chief Economist Charles St-Arnaud. 

Last week’s release of provincial GDP by industry figures for 2023 showed an interesting divergence in Alberta’s economic performance. In 2023, economic activity in Alberta increased by 1.5%. Although this is stronger than Canada as a whole, at 1.2%, Alberta performed in the middle of the pack compared to other provinces. This followed a growth of 5.3% in 2022, well above other provinces, except for Saskatchewan. However, growth in 2023 fell short of our estimate of 2.4% and Alberta’s government of 2.5%.

Although every province experienced a decline in their respective GDP per capita, Alberta’s performance is one of the weakest among Canadian provinces. GDP per capita in the province declined by 2.2% in 2023, compared to 1.5% for the country as a whole. Only Newfoundland had a worse performance, with a drop of 3.7%. Strong population growth of 4.1% in Alberta, the strongest since 1982, was a significant contributor to the lower GDP per capita.

As a result of this decline in 2023, GDP per capita in Alberta is now about $71,900, its lowest level since 2010, if we exclude 2020, which was heavily impacted by the pandemic. As such, GDP per capita in the province is currently 11% below its peak of $81,000 in 2014. As a comparison, Canada’s GDP per capita has increased 2.9% over that period. Moreover, when looking at a longer period, GDP per capita is currently at the same level as it was in 2004, implying little to no increase in wealth in two decades.

Nevertheless, Alberta’s GDP per capita is still well above that of every other province and about 30% above the national measure ($55,100), and it continues to be the wealthiest province in Canada, based of this measure. Saskatchewan’s GDP per capita, the closest to Alberta, is 10% below, at $64,600. However, back in 2014, Alberta’s measure was around 50% above the rest of the country.

Alberta’s GDP per capita has rapidly converged with the national average over the past decade. This is in line with our findings that Alberta’s measures of real income and wages have also converged to the national average over that period. (see Where’s the boom? And the rise and fall of the Alberta Advantage). As we have shown, Alberta’s performance relative to the rest of the country is closely linked to the investment cycle in the province, with Alberta’s income outperforming the rest of the country when investment as a share of GDP rises and underperforming when it shrinks (Fig 5).

Looking ahead, the declining trend in Alberta’s GDP per capita is very likely to continue in 2024. Incorporating the weaker-than-expected growth in 2023, growth in 2024 is likely to be between 2.0%-2.5% in 2024. However, with population growth expected at around 3.6%, Alberta’s GDP per capita will likely decline further in 2024 by 1%-1.5%.


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Independent Opinion

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