OTTAWA: A Conference Board of Canada report on Tuesday (Wednesday in Manila) forecast a 0.4 percent hit to Canada’s economy from lower oil prices this year as energy investments and royalty payments tumble.
As a result, gross domestic product (GDP) is expected to remain at about 2.0 percent— three to four percentage points lower than the latest Bank of Canada and International Monetary Fund (IMF) forecasts.
“Canada’s economy will suffer from the shock of tumbling oil prices this year,” the report, released at the Oil and Gas Summit in Calgary, warned.
Canadians should brace for a “sharp drop in energy investments” and a Can$4.5 billion ($3.7 billion) cut to royalty payments to provinces, it added.
The lion’s share of royalty revenue losses will accrue to oil producing Alberta, Saskatchewan and Newfoundland provinces.
Alberta, which has one of the world’s largest oil reserves, will experience the largest drop in GDP and “could slip into recession,” the report said.
Investment in the Alberta oil sands could drop by as much as Can$12 billion ($9.9 billion) this year, it said. Alberta Premier Jim Prentice, however, disputed its conclusions.