Varcoe: Gondek takes reins as Calgary’s economy recalibrates and recovers

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If timing is everything, Calgary’s new mayor has picked an opportune moment to assume leadership of a city that’s used to economic booms and busts — and is now busy recalibrating and recovering.

Mayor Jyoti Gondek addressed more than 200 members of the local business community on Friday, delivering an upbeat, in-person message to a Calgary Chamber of Commerce luncheon.

She touted the city’s economic rebound and discussed council’s decision this week to declare a climate emergency as Calgary strives to position itself as a global hub for energy transformation research and development.

Her speech landed as the economy has turned a corner, thanks to rising commodity prices, the fourth wave of COVID-19 receding, and a recent string of promising corporate investments.

“I believe there is tremendous excitement around Calgary,” Gondek told reporters after the speech.

“I’ve seen clear signals from different groups and different places about their belief that Calgary will go into recovery very soon. The economic indicators are there.”

Indeed, they are.

Earlier this month, Amazon Web Services announced it will create a major cloud-computing hub in Calgary, planning to invest more than $4 billion in the region and create more than 900 positions across the country.

On Tuesday, a new Calgary-based discount airline was unveiled. Lynx Air said it will hire up to 450 workers over the next 12 months as it begins passenger service in early 2022.

It follows international tech giants Mphasis and Infosys , along with Royal Bank of Canada, unveiling plans to bring up to 1,800 jobs (combined) to the city in the coming years.

The recovery is broader than technology, however.

A report released Thursday by the Conference Board of Canada projects Alberta will lead the country in economic growth next year, citing a rebound in energy prices.

And Statistics Canada data released Friday shows retail sales in the province increased by 1.7 per cent in September from the prior month, powered by higher motor vehicle sales, while they shrank in the entire country.

Inflation remains high and supply chain disruptions tied to flooding in British Columbia this week are being closely watched. But the broader economic outlook entering 2022 is encouraging.

“Calgary’s economy is starting to rebound,” said chamber president Deborah Yedlin.

“It’s not going to happen overnight, but we are certainly in a better position today than we have been for quite a while.”

The chamber gathering took place as the city and province are seeing a bounce back after a historic recession last year.

The province’s GDP contracted by eight per cent in 2020 after oil prices plunged to new lows and the COVID-19 crisis saw thousands of businesses shut down and jobs disappear.

The conference board projects Alberta’s economy will grow by 5.7 per cent this year and expand by 6.1 per cent in ‘22 — well above the national average — “largely because prices for energy products and other key commodities have recovered strongly.”

In 2023, Alberta’s economic growth will slow, yet still increase by 2.9 per cent.

“We see Alberta rebounding faster, in part because it had dropped the most in the country through 2020,” Ted Mallett, the board’s director of economic forecasting, said Friday.

“I wouldn’t call it buoyant; we are talking about a recovery here.”

However, the report notes energy investments are returning to the province and drilling has picked up as oil prices have rallied. The Canadian Association of Energy Contractors says 179 rigs were active during the week of Nov. 8, up 74 per cent from the same period last year.

More investment is also flowing into renewable power projects and other clean energy developments.

Most Canadian petroleum producers are now assembling their capital budgets for 2022, although a few have been released showing modest spending hikes.

Energy Minister Sonya Savage said the province is seeing some increased investment in the oilpatch, although many companies are reticent to make larger spending commitments given the broader investment climate.

“The industry is reluctant to invest in new operations when there’s a global divestment movement underway,” Savage said.

Many Canadian oil and gas companies are still recovering from the financial damage sustained in 2020.

“Traditionally at this point in the cycle, you do see a substantial upswing in capital investment. We’ve seen a far more measured approach,” said Canadian Association of Petroleum Producers president Tim McMillan, who attended Friday’s luncheon.

“But I do expect to see more drilling.”

For the 72,000 Calgarians who were unemployed last month, the most pressing issue is when will more jobs come back?

In October, the region saw employment climb by nearly 17,000 and the jobless rate fell to eight per cent, but it’s still among the highest of Canada’s largest cities.

“Calgary is now, in terms of employment, above where we were pre-COVID,” said Charles St-Arnaud, chief economist of Alberta Central.

“We can be comfortable saying the recovery is almost completed and we will finally start the expansion, where our economy will start to get bigger — and that’s after five, six years of recovery.”

At the chamber event, Gondek talked about the importance of revitalizing the downtown and dealing with the high vacancy rate for office buildings. The mayor also spoke about council’s decision to declare a climate emergency, positioning it as an opportunity to attract investment.

“Does this make us anti-oil and gas? Absolutely not. Our energy sector is already well down this path,” she told the audience, pointing to six major oilsands producers working together to reach net-zero emissions by 2050.

“We must be leaders here, establishing our city as a centre of excellence in the energy transition economy.”

Chris Varcoe is a Calgary Herald columnist.

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