Less than two years ago, tourism officials were sounding the alarm about Alberta’s struggling economy. The Canadian dollar, or loonie, had fallen below 70 U.S. cents and an economic downturn in the province, buoyed by plummeting oil prices, resulted in a precipitous drop in border crossings into Montana.
While domestic travel and spending in the region — fueled by low gas prices and an improving U.S. economy — continued to increase in both 2015 and 2016, the dropping loonie put a dent in some local retailers’ bottom line.
That may be about to change, if it hasn’t already.
Alberta is making a comeback faster than many predicted, even just a few months ago. Gross domestic product in the province is forecast to rise 2.9 percent this year, according to a recent Bloomberg survey of economists. That’s up from the same April survey that predicted 2.5 percent growth.
“Everyone should feel good about it, not just Alberta,” Bank of Nova Scotia deputy chief economist Brett House told Bloomberg. “The Canadian economy is firing on all cylinders.”
What’s shocking about the survey, however, is that Alberta, which has been the worst-performing province over the last two years, is predicted to have the fastest-growing GDP in 2018.
To be sure, there are still challenges ahead for our northern neighbor. Falling tax revenues and last year’s massive Fort McMurray fire have plunged the province into debt for the first time since 2000. But Finance Minister Joe Ceci said the outlook is improving and the government hopes to balance its books in six years.
Meanwhile, the jobs picture in Alberta has at once improved substantially and faster than anticipated. The unemployment rate has fallen to 7.4 percent, from 9 percent in late 2016. Job vacancies are up. So are retail sales. And, perhaps most dramatically and importantly to our economy, so is the loonie.
Last week, the Canadian dollar surpassed 80 U.S. cents, reaching its highest level in two years. The correlation between the strength of their currency and local spending cannot be overstated. For example, in early 2016, as the loonie continued its downward march, Kalispell’s Costco told the Beacon that its Canadian customers were down about 30 percent. And other area retailers were reporting similar drops.
It’s unclear whether the turnaround will result in increased local sales and hotel bookings this summer. But optimism about the Canadian economy is bound to have a trickle-down effect on our region, which is already experiencing increased visitation and record-setting crowds in Glacier National Park.
More importantly, it’s encouraging that our neighbor is regaining its footing after a two brutal years during which its economy shrank by more than 7 percent and tens of thousands of people were laid off.
It wasn’t long ago that Northwest Montana was gripped in recession, with a jobless rate stuck above 10 percent, and a strong Canadian dollar — about equal to the U.S. dollar at the time — attracted Albertan spending and real estate investment when the area desperately needed it.
The fate of the energy industry may dictate how fast Alberta fully recovers from its economic downturn over the next few years. But it at least appears the worst is over and I’m happy to cheer for the province’s comeback.
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