Calgary Floods to Dent Canadian Economic Growth
Extensive flooding in the western Canada city of Calgary, centre of the country’s oil industry in Alberta, will have a significant impact on the Canadian economy.
Preliminary estimates from BMO Capital Markets suggest that the floods will probably mean at least C$2bn (US$1.91 billion) in lost economic output for Canada in June, and will dent the country’s economic growth figures for Q213 and Q313.
Calgary accounts for a 6.5% share of the Canadian economy, and BMO economist Benjamin Reitzes, estimates that the floods would take a 0.1 percentage point bite out of June’s gross domestic product (GDP). His calculation assumes that about one quarter of Calgary’s economy would be affected and that business in the city would be halted for two or three days.
Reitzes stressed that his estimate was very rough and there was definitely some ‘upside’ to it. “The longer this goes on, the wider the devastation,” he added. He estimates that GDP for Q213 will show a 1.8% annualised rate – in line with the Bank of Canada’s forecast – assuming that GDP data for April out later this week is flat.