What will drive meaningful per capita GDP growth in Canada? For years, it has been one of the defining questions in Canadian economic policy, and the stakes are significant. The answer will have wide-ranging implications for every part of the country.
To explore this question, KV Capital recently spoke with Mark Parsons, Chief Economist at ATB Financial.
What is Canada’s economic growth problem? Why does it matter?
For more than a decade, GDP per capita in Canada has not been growing at a healthy rate.
Closer examination reveals a more nuanced problem: it is not simply that growth is sluggish, but that less productive components are driving it. The only significant boost to per capita growth in Canada’s economy came from consumer spending, government spending, and until recently, housing.
In level terms, business investment is lower today than it was in 2014. In per capita terms, it is at levels from two decades prior.
The problem is structural and does require Canada shift from a population and consumption-driven growth model to one that is powered by investment and exports. This is not easy in the middle of a trade war, but it is the path to becoming a stronger, wealthier nation. Recent plans to accelerate major project investment and overseas exports are a step in the right direction, but we will need to see those plans translate into execution.
Alberta’s GDP growth is outpacing the national average, but this has happened before. Is what we are seeing today another energy-price tailwind, or evidence of genuine economic diversification?
Alberta’s economy has significantly outpaced the national average in recent years, and ATB Financial projects this will continue until at least 2028.
The population has grown even faster. As a result, Alberta’s real GDP per capita has edged lower in the past three years, but we expect growth to return this year. Alberta maintains the highest real GDP per person among provinces, although the gap has narrowed since 2014.
Alberta’s status as an economic outlier is also reflected in migration data.
Since the 1990s, Alberta’s population has consistently outpaced the national average, often by a significant margin. This has accelerated in recent years. Alberta is now projected to overtake British Columbia as Canada’s third most populated province within the next 10-15 years. Since 2022 it has consistently led the country in interprovincial migration.
One interesting aspect of this population and economic growth is that it is not driven by the energy sector in the same way as in the past. In fact, oil and gas capital expenditure in Alberta remains well below 2014 levels even as oil production continues to set new records. The industry is optimizing existing assets and maintaining capital discipline. A range of industries are growing Alberta’s economy today including critical minerals, food manufacturing, aviation, and technology and data centres.
This, in combination with Alberta’s housing affordability advantage, is a major driver of the province’s population growth.
The gap between Alberta and Canada’s benchmark housing prices peaked at $369,000 in February 2022, just before the Bank of Canada began raising interest rates.
High housing costs and rising interest rates proved to be a tipping point. The “affordability gap” has narrowed but still sits at $154,000 today. While housing starts have fallen below their record highs, recent data shows Alberta starts are still well above the 10-year average, with annual figures expected to remain above pre-pandemic levels.
Population growth of this magnitude creates its own economic momentum. Which sectors of Alberta’s economy are absorbing that new growth?
Job creation in Alberta in recent years has been driven by a broad base of industries. Oil and gas employment, in fact, is lower today than it was in 2015. Much of this growth has come from the services sector. For example, professional and scientific services has been one of the key growth sectors, and now far exceeds employment in oil and gas extraction. Alberta has also steadily increased its share of national manufacturing employment since the early 1980s by building on its resource strengths.
The jobs picture points to an Alberta economy that has diversified its industrial base. One example is tourism. Post-pandemic data reveal that international visits have grown faster in Alberta than in the whole of Canada, in part supported by more direct air access. Another example is critical minerals. A recent Alberta Geological Survey found that Alberta holds almost 83 million tonnes of lithium carbonate equivalent, which could be worth almost US$1 trillion. 1 Another growth opportunity is food manufacturing. Driven by recent expansions in potato processing, Alberta has recently emerged as the largest producer of potatoes in Canada.
With oil and gas investment and employment relatively static in recent years, does this signal a diminishing role for the energy sector?
Not at all. It is true that investment has declined from the boom days of 2010-2014, but oil production continues to set new records. The energy sector is contributing to national economic growth increasingly through the export channel. Today energy is, by far, Canada’s single largest export category.
The current energy crisis due to the war in Iran and blockage of the Strait of Hormuz has reinforced Canada as a safe haven destination for energy. There is an opportunity to grow overseas exports through new export infrastructure, building on recent gains from the Trans Mountain Expansion and Coastal GasLink/LNG Canada Phase 1. This would help solve the nation’s economic growth problem by boosting investments and exports.
Rising energy exports will benefit the entire country, especially as Canada moves to strengthen local supply chains. For example, Western Canada’s export infrastructure could be a growth market for Ontario steel.
Canada has the opportunity to build on recent progress. This is clear in the data on national energy exports to Asia since 2019.
At the base of each of these “hockey stick graphs,” there is a major piece of energy export infrastructure coming online.
To understand the impacts of expanding pipeline capacity, ATB Economics recently collaborated with Studio.Energy — led by Canadian energy expert Peter Tertzakian. Economic modeling showed that adding pipeline capacity of 1.5 million barrels of oil per day would provide an average annual lift of $31.4 billion to Canada’s real GDP between 2027 and 2035. The buildout, including the Pathways Alliance carbon capture project, would support an average of 112,000 additional jobs annually over this period.
The economic impact of infrastructure like this would be more than a marginal shift for Alberta. It would fundamentally improve the health of Canada’s national economy at a time when structural improvements are imperative. For that reason, the current economic moment in Alberta warrants attention from anyone focused on Canada’s economic standing on a global stage.
For more analysis of Alberta’s economy visit atb.com/economics or follow Mark on LinkedIn. To continue the conversation about opportunities within the real estate ecosystem in Alberta, reach out to KV Capital here.
1 Khan, Anam. “Alberta Confirms a Potential US$1 Trillion Lithium Resource: What Happens Now?” BNN Bloomberg, 2 April 2026, www.bnnbloomberg.ca/business/2026/04/02/alberta-confirms-a-potential-us1-trillion-lithium-resource-…
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