Red Deer And Medicine Hat Feel The Pinch Of Lower Oil Prices

by ahnationtalk on June 30, 2015748 Views

Stronger growth forecast for Brandon, Manitoba; stable growth anticipated for Lethbridge, Alberta

Ottawa, June 30, 2015—Red Deer’s economy is forecast to shrink this year, while Medicine Hat is expected to see only modest growth, according to The Conference Board of Canada’s Mid Sized Cities Outlook 2015. Conversely, strong cattle prices will keep growth stable in Lethbridge, while solid gains in many sectors, including manufacturing and construction, will drive economic growth higher in Brandon.

“The dramatic drop in oil prices has hit Alberta hard, and Red Deer and Medicine Hat are no exception,” said Alan Arcand, Associate Director, Centre for Municipal Studies. “However, economic growth should pick up next year as oil prices begin to recover.”


  • Hit hard by lower oil prices, Red Deer’s economy is forecast to contract 1.2 per cent in 2015.
  • Real GDP in Medicine Hat is forecast to expand by just 0.4 per cent in 2015, with stronger growth of 1.6 per cent forecast for 2016.
  • Lethbridge’s diverse economy and its origins as an agricultural centre should keep overall growth stable at 1.1 per cent this year.
  • Widespread gains will boost Brandon’s real GDP by 2.3 per cent this year, followed by a 2.4 per cent gain next year.

Red Deer’s economy is forecast to contract 1.2 per cent in 2015 due to lower oil prices. In fact, the city’s resource, agriculture and utilities sectors, together, are on track to fall 2.5 per cent this year. Other sectors will feel the pinch of weaker demand from the oil and gas sector. In particular, construction output is forecast to contract almost 13 per cent his year and a further 3.2 per cent in 2016. Similarly, the manufacturing industry is expected to see output rise only 0.1 per cent this year. Fortunately, economic growth is forecast to resume next year as oil prices recover somewhat.

A solid performance by Medicine Hat’s agriculture industry will help keep the local resources, agriculture and utilities sector growing, despite the negative impact of the collapse in oil prices. Together these sectors are forecast to expand by 0.8 per cent this year. Growth in the city’s manufacturing sector will also cool but remain positive in 2015 at 0.7 per cent. Overall, the weakness in the economy will cut employment by 4.5 per cent this year.

Lethbridge’s diverse economy and its origins as an agricultural centre should help the city weather the recent drop in energy prices. High cattle prices are providing a boost to the region, allowing Lethbridge’s resources, agriculture and utilities sector to grow by 1.2 per cent the year. The city’s manufacturing, construction and services sectors are expected to post gains this year. Economic growth in Lethbridge is forecast to remain stable at 1.1 per cent in 2015, following a gain of 1.2 per cent in 2014.

Meanwhile, Brandon’s real GDP is expected to increase by 2.3 per cent this year, followed by a 2.4 per cent gain next year, thanks to solid gains in a number of sectors, including manufacturing, construction, and whole sale and retail trade. The area’s agriculture and manufacturing sectors are expected to benefit from increased demand at home and south of the border. At the same time rising, housing starts will boost construction activity, while better employment prospects are expected to lift consumer spending.

The Mid-Sized Cities Outlook provides economic forecasts for seven cities that contributed financially to the research—Lethbridge, Red Deer, Medicine Hat, Brandon, Timmins, Sault Ste. Marie and Rimouski. It also includes historical economic and employment data for 32 mid-sized Canadian cities.

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