By Gordon Isfeld
OTTAWA (MaceNews) – Canada’s number two monetary policy leader on Thursday highlighted some positive economic news for Alberta, a province that has weathered a big share of the country`s energy woes.
“In terms of oil, prices have recovered from last autumn’s decline, production has started to increase, and profitability has started to improve,” Carolyn Wilkins, the Bank of Canada`s senior deputy governor, told members of the Calgary Chamber of Commerce.
“At the same time, we know that curtailments and transportation constraints continue to weigh on production,” Wilkins said. “It`s fair to say that Alberta and other energy-intensive regions have been on an economic roller coaster over the past few years.”
“There is certainly a lot to talk about regarding the outlook,” Wilkins told the audience.
“There’s the trade war between the United States and China. And, here at home, there are the challenges of operating in the oil and gas sector as well as delivery constraints affecting a broader range of products.” she said. “It’s fair to say that Alberta and other energy-intensive regions have been on an economic roller coaster over the past few years.”
The outcome has resulted in “painful adjustments” in Canada’s energy sector and impacted the country’s economic bottom line,” the senior deputy governor said.
But she contrasted those developments with more positive elements of the Canadian economy, as a whole.
“For much of the past couple of years, the Canadian economy overall performed near full capacity,” Wilkins said.
“The unemployment rate fell to historic lows, while wage growth improved,” she pointed out.
“Unfortunately, several developments at the end of 2018 and beginning of 2019 have set us back… (and) there was a drop in oil prices last autumn and ongoing transportation constraints. Escalating tariff actions by the United States and China, and related tensions, have undermined trade and business investment. And housing, a linchpin of the recovery since the crisis, slowed sharply.”
These developments have slowed Canada’s economy in the first half of 2019, although the Bank of Canada expects the economy to pick up in the remainder of the year. The BoC will present its latest outlook in July.
On Wednesday, the BoC governor Stephen Poloz — along with senior deputy Wilkins and other members of the governing council — maintained the bank`s key lending level at 1.75 per cent, a move that was anticipated by most private-sector economists.
“The outlook for investment was only one of many factors that went into our interest rate announcement,” Wilkins told the Calgary audience. “As I said, there have been some encouraging signs that investment outside the energy sector has firmed up.”