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 EEDC 2010 Economic Outlook Luncheon November 24, 2009 1. Technically the recession is over in most parts of the 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 2. Edmonton and Alberta continue to have better economic fundamentals than most 3. Key issue going forward will be need for improved productivity Alberta has become a high cost location Concern about increasing value of Canadian $ Concern about future labour shortages 4. Uneven impact on energy sector 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 Edmonton s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Office Vacancy Housing Air Service Inflation
Where We Are Today GDP per Capita Edmonton Calgary 1992 Calgary +36% Edmonton Calgary 2009 Calgary +16% Edmonton Toronto 2009 Edmonton +14% Edmonton Toronto 1992 Two Cities Equal Source: Conference Board of Canada
Where We Are Today Retail Sales Source: Conference Board of Canada
Where We Are Today Consumer Insolvency Source: Statistics Canada
Where We Are Today Unemployment Edmonton Unemployment Rate 9 8 7 6 5 4 3 2 1 0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Source: Statistics Canada
Where We Are Today Office Vacancy 6.9% 10.4% Source: Avison Young
Where We Are Today Housing Source: RBC Economics Research
Where We Are Today Housing MLS Sales - Edmonton 3000 2500 2000 1500 1000 500 0 Source: Edmonton MLS Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
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% 0.0% -5.0% -10.0% 2006 2007 2008 2009 Calgary Edmonton Montreal Ottawa Toronto Vancouver Winnipeg Annual Enplanements and Deplanements (P er Cap ita ) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Airline Passengers 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 Consumer Price Index - Edmonton 9.0% 8.0% 7.0% Annual CPI Increase 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Jan -2.0% 1993-3.0% Jan 1994 Jan 1995 Jan 1996 Jan 1997 Jan 1998 Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010-4.0% -5.0% Source: Statistics Canada
Where We Are Today Edmonton s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Office Vacancy Housing Air Service Inflation
Where We Are Today Edmonton s Economic Dashboard Income / GDP Retail Sales Unemployment Insolvency Office Vacancy Housing Air Service Inflation
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 Source: Energy Information Administration
Short to Medium Term Outlook Source: Energy Information Administration
Short to Medium Term Outlook Source: Pacific Currency Exchange
Short to Medium Term Outlook Source: International Monetary Fund
Short to Medium Term Outlook 4.3% 2.8% 2.5% Source: BMO Capital Markets
Short to Medium Term Outlook 3.0% 3.9% 4.1% 1.8% Source: Conference Board of Canada
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 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 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 Global Oil and Gas Markets World Oil Demand by Region 100 1. In spite of energy conservation and alternative 80 fuels, over the foreseeable future the world Change in Oil Demand by Region 60 (2008-2030) remains committed to oil and gas OECD Pacific OECD Europe OECD North America E. Europe /Eur as ia Africa Latin America Other Asia Middle East India China Production (mb/d) World oil demand expected to rise an additional 25% 20 by 2030 (from 85 to 106 million barrels daily) 0 2000 2008 2015 2030 Demand in industrialized nations expected to decline Major growth in developing nations (China, India, Middle East) as they join the club -2 0 2 4 6 8 10 mb/d 120 40 Other/Misc. Non-OECD China/India Non-OECD Other OECD North America OECD Other
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 6 Saudi rising rapidly (95% 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
Alberta Longer Term Outlook Global Oil and Gas Markets 3. Alberta s oil sands are increasingly being 300 viewed as the world s largest and most 250 politically stable source of oil billion barrels 200 Alberta is second only to Saudi Arabia in terms of 150 total proven reserves 100 Alberta represents over 50% of the world s privately 50 developable oil reserves 0 Cost escalation and environmental issues are critical to the long term development potential of heavy Alberta s oil Reserves 174 Billion Barrels Saudi Arabia Proven Oil Reserves Canada Iraq Venezuela Russia Mexico
Longer Term Outlook Value Added from Oil Sands From bitumen production to value added processing Fuel Products Diesel Kerosene Gasoline Fuel Oil Petrochemicals Ethylene Propylene Butadiene SynGas Hydrogen Naphtha Fertilizers Ammonia Ammonium Sulphate Elemental Sulphur Urea
Longer Term Outlook Products Value Added from Oil Sands Processes Oil Sands Plants Bitumen Synthetic Crude Oil Upgraders Fuels and Petrochemicals Consumer and Industrial Products Refineries and Petrochemical Plants Downstream Industries
Real Estate Longer Term Outlook Construction Health Care Manufacturing Forestry Agriculture Entertainment F.I.R.E. Education F.I.R.E. Education Core Sectors in the Future Tourism Tourism Health Care Retail Advanced Technology Hospitality Energy & Advanced Petrochemicals Energy Technology & Petro Chemicals Engineering Professional Services Utilities Transportation & Logistics
Longer Term Outlook Key Issues and Concerns Changing structure of the global economy Environmental protection and backlash Productivity and competitiveness Population and work force growth Economic growth and the Goldilocks phenomenon Source: Conference Board of Canada
Longer Term Outlook Key Issues and Concerns Changing structure of the global economy Environmental protection and backlash Productivity and competitiveness Population and work force growth Economic growth and the Goldilocks phenomenon Source: Conference Board of Canada
Edmonton Today Overall Status Short to Medium Term Longer Term
The Challenge Setting a Goal To have Edmonton become recognized as one of the world s top 5 mid sized cities
Longer Term Outlook Economy Quality of Life Focus on establishing Edmonton as one of the world s great mid-size cities External Transport Urban Transport Culture Image Great Cities Safety Health Social Conscience Education Recreation Places to Live Environment
The Challenge The World s Largest Cities City Type and Size Type Population North America Number of Cities Rest of World Total Mega 20.0 M Plus 2 5 7 Very Large 10.0 20.0 M 1 17 18 Large 5.0 10.0 M 11 28 39 Intermediate 2.5 5.0 M 11 86 97 Mid-Size 1.0 2.5 M 43 264 307 Total 68 400 468
The Challenge Who are the Benchmarks? Who is our Competition? Munich Lyon Orlando San Antonio Abu Dhabi Pretoria Stockholm Vancouver New Orleans Cologne Calgary Amsterdam Xiamen Glasgow Dubai Copenhagen The Hague Auckland Memphis Oslo Ottawa Fukuoka Columbus Brisbane
Where We Are Today A B Calgary and Edmonton are rated #1 and #3 in the world C D Source: Conference Board of Canada
Where We Are Today Prosperity Index Variables Economy Overall GDP per capita GDP growth Productivity growth Employment growth High tech employment Disposable income per capita Knowledge employment Residential building permits Total tax index Labour Attractiveness Population 25 34 Immigrant population Teachers per 1,000 Population with bachelor s degree Homicide crime rate Cultural occupations Comfortable climate Housing affordability Domestic water usage Source: Conference Board of Canada
Conclusion Thank you for the opportunity to speak today EEDC would be pleased to provide any follow up information or a copy of this presentation