Red Deer Market Update – Mar 4/11
Market Update – Who can predict what will happen next? No one saw it coming, or at least we didn’t hear anyone predicting it, but major unrest suddenly hit North Africa and much of the Arab world and is causing economic ripples and uncertainty in the rest of the world. Any time oil supplies are threatened, the world goes into turmoil. Oil prices go up, which has a negative impact on airlines and trucking companies, to name a few, in countries that rely on imported oil. On the other hand, countries that export oil are quite likely to see economic gains from increased oil prices.
The news item below shows that Canada and Alberta are already doing very well relative to much of the rest of the world. Increased demand and higher prices for oil could very quickly change the landscape in Alberta and help us see a return to the good old days when budget surpluses were the norm. We don’t want to see the good old days as they were in 2007 but a return to balanced markets and strong employment will be welcome. We believe that can happen in 2011.
Canada’s Economy Comes up Roses in Q4 – Dan Sumner, Economist, ATB Financial
If you had to live in a developed country during the 2008/2009 recession and subsequent recovery, Canada was pretty much as good as it got. And according to new numbers released this morning, the Canadian economy is continuing to surprise the markets to the upside.
Canadian Gross Domestic Product (GDP), a measure of the overall economic output of the country, rose by an annualized rate of 3.3% in the fourth and final quarter of 2010. This reading is ahead of both market expectations (+3.0%) and what the Bank of Canada was predicting (+2.3%), and is also stronger than US economic growth over the same period (+2.8%).
The main contributor to the strong Q4 growth was a blockbuster month for exports in December, although consumer spending and business investment were also solid. Across industries gains were widespread but the biggest gainer was the mining and oil & gas extraction sector, which bodes well for Alberta.
With the final data point for 2010 now available, Canada’s GDP grew by 3.1% in 2010 after falling by 2.5% in 2009. This compares with 2.8% growth in all of 2010 for the US. Readings on Alberta’s provincial GDP growth are not available yet (due out in spring 2011), although considering the energy sector has seen a strong rebound, growth is looking fairly strong.
Moving ahead the Canadian economy is likely to remain robust in 2011, although growth could cool off as we move further away from the recession. The most important factor in 2011 will be what happens in the US. If things finally start to gallop down there, it will bode really well for the great white north.
