Alberta has good odds to avoid post-boom bust: TD

Despite some warning signs on the horizon, Alberta should be able to avoid a repeat of the busts that have followed the booms of its past, two economists said Thursday.

'Yet Alberta needs to focus on addressing some of its vulnerabilities most which stem from the pressures that flow from a burgeoning economy in order to lay the seeds for prosperity well into the future.' Don Drummond, TD Bank

In a new report, TD Bank economists Don Drummond and Derek Burleton put the odds of a hard landing for the province's economy at one in four.

Drummond and Burton said that some of signs of slowing are already visible, including falling natural gas prices and drilling output, and slower growth in sales of homes and consumer goods.

With the province expected to post economic growth of 4.3 per cent this year, growth is expected to moderate to between 2.5 andthree per cent for 2008-09 due to rising costs for labour, production and infrastructure.

The economists said that while this "equates to a sub-par performance, it is far from the bust scenario that has followed past periods of euphoria."

"The promise of oilsands projects, combined with assets such as a young, educated population and an excellent business climate, bodes well for the region," Drummond said.

"Yet Alberta needs to focus on addressing some of its vulnerabilities most which stem from the pressures that flow from a burgeoning economy in order to lay the seeds for prosperity well into the future. Progress has been made, but more needs to be done to ensure the province sustains its enviable economic position," he said.

The economists said that diversification bodes well for the province's economy. Oil and gas represents 19 per cent of the province's economic activity, down from 23 per cent in 1991.

Alberta is currently grappling with a recent royalty review that has recommended hiking the rate charged to oil and gas companies.

A government-appointed panel released a report last week that said Albertans are not getting their fair share of energy revenues and recommended raising royalty rates by 20 per cent, or $2 billion a year.

Oil and gas companies lashed out at the suggestion, saying an increase would hurt the province's investment and growth potential.