Ron Gilbertson President and CEO Edmonton Economic Development Corporation
• Edmonton and Alberta Today • Short to Medium Term Outlook • Long Term Outlook • The Challenge
Where We Are Today Where We Are Today EEDC 2010 Economic Outlook Luncheon November 24, 2009 Technically the recession is over in most parts of the 1. world – but the pace of recovery is tentative Corporations and governments generally entered the • recession in better shape than in past downturns • Asia, not U.S., will likely drive the recovery • Expect low interest rates and inflation to continue for some time • Concern about debt levels and double dip recovery
Where We Are Today Where We Are Today Edmonton and Alberta continue to 2. have better economic fundamentals than most Key issue going forward will be need for improved 3. productivity • Alberta has become a high cost location Concern about increasing value of Canadian $ • • Concern about future labour shortages Uneven impact on energy sector 4. Expect growing role of heavy oil, and impact on royalties • • Concern about long term surplus in natural gas – negative impact on prices, drilling activity, and service sector
Where We Are Today Where We Are Today Edmonton’s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Housing Air Service Inflation Office Vacancy
Where We Are Today – – GDP per Capita Where We Are Today GDP per Capita Edmonton – Calgary 2009 – Calgary +16% Edmonton – Calgary 1992 – Calgary +36% Edmonton – Toronto 2009 – Edmonton +14% Edmonton – Toronto 1992 ‐ Two Cities Equal Source: Conference Board of Canada
Where We Are Today – – Retail Sales Where We Are Today Retail Sales Source: Conference Board of Canada
Where We Are Today – – Consumer Insolvency Where We Are Today Consumer Insolvency Source: Statistics Canada
Where We Are Today – – Unemployment Where We Are Today Unemployment Edmonton Unemployment Rate 9 8 7 6 5 4 3 2 1 0 8 9 8 8 8 8 8 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 1 - - - - - - - - - - - - - l l n r y p v n r y p v n u u a a a e o a e o a a a J J M M J M S N J M S N J Source: Statistics Canada
Where We Are Today – – Office Vacancy Where We Are Today Office Vacancy 6.9% 10.4% Source: Avison Young
Where We Are Today – – Housing Where We Are Today Housing Source: RBC Economics Research
1000 1500 2000 2500 3000 Where We Are Today – 500 Where We Are Today 0 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 MLS Sales - Edmonton Jan-94 Jan-95 Jan-96 – Jan-97 Housing Housing Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Source: Edmonton MLS Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Where We Are Today – – Air Service Where We Are Today Air Service Annual Passenger Growth Major Canadian Airports 30.0% 25.0% 20.0% Annual Passenger Growth 15.0% 10.0% 5.0% Airline Passengers 0.0% A n n u a l E n p la n e m e n ts a n d D e p la n e m e n ts 2006 2007 2008 2009 12.0 -5.0% 10.0 -10.0% Calgary Edmonton Montreal Ottawa Toronto Vancouver 8.0 Winnipeg (P e r C a p ita ) 6.0 4.0 2.0 0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Calgary Edmonton Source: Canadian Airport Authorities
Where We Are Today – – Inflation Where We Are Today Inflation Consumer Price Index - Edmonton 9.0% 8.0% 7.0% 6.0% Annual CPI Increase 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan -2.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -3.0% -4.0% -5.0% Source: Statistics Canada
Where We Are Today Where We Are Today Edmonton’s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Housing Air Service Inflation Office Vacancy
Where We Are Today Where We Are Today Edmonton’s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Housing Air Service Inflation Office Vacancy
Short to Medium Term Outlook Short to Medium Term Outlook Key Economic Drivers • Energy prices • Value of the Canadian dollar • Global economic growth • Alberta and Canadian economies
Short to Medium Term Outlook Short to Medium Term Outlook Source: Energy Information Administration
Short to Medium Term Outlook Short to Medium Term Outlook Source: Energy Information Administration
Short to Medium Term Outlook Short to Medium Term Outlook Source: Pacific Currency Exchange
Short to Medium Term Outlook Short to Medium Term Outlook Source: International Monetary Fund
Short to Medium Term Outlook Short to Medium Term Outlook 4.3% 2.8% ‐ 2.5% Source: BMO Capital Markets
Short to Medium Term Outlook Short to Medium Term Outlook 4.1% 3.0% 3.9% ‐ 1.8% Source: Conference Board of Canada
Short to Medium Term Outlook Short to Medium Term Outlook Key Issues and Concerns • Strength of the economic recovery • Value of the Canadian and U.S. $ • Oil and natural gas prices • Alberta’s fiscal situation • Economic growth and the Goldilocks phenomenon Source: Conference Board of Canada
Short to Medium Term Outlook Short to Medium Term Outlook Key Issues and Concerns • Strength of the economic recovery • Value of the Canadian and U.S. $ • Oil and natural gas prices • Alberta’s fiscal situation • Economic growth and the Goldilocks phenomenon Source: Conference Board of Canada
Longer Term Outlook Longer Term Outlook Key Economic Drivers • Global Oil and Gas Markets • Creating a Value ‐ Added Economy • Diversification of Edmonton’s Economy • Emphasis on Quality of Life
Longer Term Outlook Longer Term Outlook Global Oil and Gas Markets World Oil Demand by Region 120 1. In spite of energy conservation and alternative 100 fuels, over the foreseeable future the world 80 Other/Misc. Production (mb/d) Non-OECD China/India Change in Oil Demand by Region Non-OECD Other 60 remains committed to oil and gas (2008-2030) OECD North America OECD Other 40 OECD Pacific World oil demand expected to rise an additional 25% • OECD Europe 20 by 2030 (from 85 to 106 million barrels daily) OECD North America E. Europe/Eurasia 0 Demand in industrialized nations expected to decline 2000 2008 2015 2030 Africa • Latin America Major growth in developing nations (China, India, • Other Asia Middle East Middle East) as they “join the club” India China -2 0 2 4 6 8 10 mb/d
Longer Term Outlook Longer Term Outlook Global Oil and Gas Markets 2. Production from existing sources expected to decline by over 50% by 2030 To offset production declines and meet increases in world • demands, IEA projects that oil supply equivalent to “6 new Saudi Arabia’s” must be found by 2030. The cost of exploration and production rising rapidly (95% • 6 Saudi Arabia’s increase since 2000) Long term pricing expected to be in the $100 - $120 a barrel • range *Source: International Energy Agency – World Energy Outlook 2009
Longer Term Outlook Longer Term Outlook Global Oil and Gas Markets Proven Oil Reserves 3. Alberta’s oil sands are increasingly being 300 300 300 viewed as the world’s largest and most 250 250 250 politically stable source of oil billion barrels billion barrels billion barrels 200 200 200 Alberta is second only to Saudi Arabia in terms of • 150 150 150 total proven reserves Alberta Alberta Alberta 100 100 100 Alberta represents over 50% of the world’s privately • 50 50 50 developable oil reserves 0 0 0 Cost escalation and environmental issues are • a a a a a a q q q a a a a a a o o o i i i d d d l l l i i i b b b a a a c c c e e e s s s a a a r r r i i i a a a u u u s s s x x x I I I r r r n n n u u u z z z e e e critical to the long term development potential of A A A a a a e e e R R R M M M C C C n n n i i i d d d e e e u u u V V V a a a heavy oil S S S Alberta’s Reserves 174 Billion Barrels
Longer Term Outlook Longer Term Outlook Value Added from Oil Sands Fuel Products Diesel From bitumen production to value added processing Kerosene Gasoline Fuel Oil Petrochemicals Ethylene Propylene Butadiene SynGas Hydrogen Naphtha Fertilizers Ammonia Ammonium Sulphate Elemental Sulphur Urea
Longer Term Outlook Longer Term Outlook Value Added from Oil Sands Processes Products Oil Sands Plants Bitumen Upgraders Synthetic Crude Oil Refineries and Petrochemical Plants Fuels and Petrochemicals Downstream Industries Consumer and Industrial Products
Real Estate Longer Term Outlook Longer Term Outlook Construction Hospitality Health Care Professional Health Manufacturing Services Education Care F.I.R.E. Education F.I.R.E. Core Sectors in Utilities Forestry the Future Advanced Tourism Technology Advanced Tourism Energy & Transportation Agriculture Energy & Petro ‐ & Logistics Technology chemicals Petro ‐ Chemicals Engineering Entertainment Retail
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