Alberta recession to see provincial GDP shrink by 1.4% this year: TD

Alberta is in a recession and will see its GDP contract by about 1.4 per cent in 2015, according to a new report from TD Economics.

The report blames the contraction on the precipitous drop in oil prices since July 2014.

And, while the report forecasts a moderate recovery for oil prices in 2016, it doesn't expect the increase to be at "levels that would be consistent with a V-shaped rebound in investment and growth in the province."

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Economic growth in Alberta is pegged at a modest 1.2 per cent next year and 1.6 per cent in 2017, according to the report's outlook.

TD Economics highlighted several areas of Alberta's economy that have been hardest hit, including:

• Construction sector output is forecast to contract by more than 20 per cent in 2015 in the wake of a 25 per cent drop in in non-residential and engineering construction.
• Housing starts are also forecast to decline by 10 per cent this year.
• In the real estate market, both existing home sales and sale prices are forecast to contract over the next two years.
• While oil production is "still on track" to expand in 2015 and crude output is expected to continue growing over the next several years, reduced capital spending is expected to lead to less oil-related construction activity in 2016 and 2017.
• Job creation has "held up well" so far, with employment up 1.7 per cent, year over year, as of August, but the report forecasts a "steep decline in employment over the next few quarters."