Alberta economy to shrink by 1.9% in 2016, forecasts ATB

Alberta's real gross domestic productactually shrunk by four per cent last year and is expected to decreaseby another 1.9 per cent this year, according to the latest economic outlook from ATB Financial.

That's a far cry from the prediction the bank made at this time last yearwhen it said the province would likely avoid a recession in 2015.

"Now that we're halfway through 2016we appear to be kind of right in the belly of this recession," said ATB chief economist Todd Hirsch.

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Even as early as last October, ATB was projecting a modest economic recovery in 2016, but it now says that hope has evaporated.

A month-long shutdown at oilsands facilities in Alberta afterthe Fort McMurray fire resulted in about 30 million barrels of foregone production, according to the report, costing the industry an estimated $1.6 billion in lost revenue.

"Thiscoupled with a drop in investment, sliding retail sales and a weak labour market have pinned our province's economy down for another difficult year," the report states.

ATB expectsthe province's unemployment rate will rise above eight per cent this summer.It also predicts the weak economy will continue to weigh down the retail and housing markets.

Drop in restaurant sales

That comes as little surprise toVessyHaygarova. Sheworks as amarketing co-ordinator for Group933 Hospitality, which owns Roosevelt Eatery and four other restaurants in Calgary.

"We've definitely seen a drop in salesI'd say between 20 and 25 per cent," she said. "It's been a challenge but we're keeping positive."

Haygarova said her company has also beenseeing a rise in job seekers without restaurant experience.

"It's a lot of high-end applicants that are coming from engineering jobs or oil and gas corporate jobs."

Despite these challenges, ATB still expects Alberta's economy to bounce back, buoyed in part by the rebuilding of Fort McMurray.

The report states that"barring a major global economic event later this year, a modest rebound in 2017 is likely."

GDP growth in 2017 is forecast at two per cent.