May 2nd, 2021
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Economic Resilience - Survey OVERVIEW
FRIDAY - 4PM MT MAY 7th
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The economy is an essential contributor to your welfare. It is the source of jobs and the prime contributor of public taxes supporting the vast array of services comprising the welfare state. If the economy is the "forest", then business and jobs are the "trees".
The KEI Network exists for but one reason, to contribute to development of economic resilience, that is, the capacity of the economy to absorb and recover from shocks. This is particularly important in economies that are not diversified, and often the objective of government policy where economic shocks are frequent. Alberta is but one example, where development of the oil and gas industry, triggered a seemingly never-ending cycle of booms and busts. Our focus is to advocate for economic diversification/ resilience, by both building a constituency and increasing public understanding through dialogue and monitoring of economic resilience as viewed by you, the Network.
It is our belief that "sentiment" is an important qualitative measure, probably even more important - more valid, more robust, and a better predictor, than any quantitative economic measure such as GDP.
Throughout April we discussed the state of the economy - particularly in Alberta. Of particular interest were how Alberta's Regions were faring, the relevance of innovation and the contributions of entrepreneurs, and the effectiveness of the so called innovation ecosystem.
Despite the Covid pandemic - that has crippled "public" activities such as tourism and public entertainment, the tone of discussion and the various presentations were generally upbeat particularly for commodities such as in forestry, oil and gas, and agriculture plus the contribution of entrepreneurs, vision and leadership, and the innovation ecosystem. Always present were cautionary interests in the environment, inflation and debt, public health and fraud.
That was April featuring weekly webinars of your personal perspectives and those of invited guests - recorded HERE. Also during April we hosted the semi-annual Economic Resilience survey. The results - gathered since 2015, provide a view of your economy in macro and granular detail. There is a lot to share, so for May we'll share it in stages: first an Overview, followed by an analysis by Region, by Industries, Professions, Public Services, then an assessment of the Innovation Ecosystem, wrapping up May with Conclusions and Recommendations.
Ready? Is the Alberta economy resilient?
Of the survey respondents, most (86%) were from Alberta. The following analysis is devoted to the Alberta respondents. On a scale of from 1 - Very Resilient to 5 - Not Resilient, the average of 2.68 in the spring 2021 survey is approaching Neutral (3.0) and up significantly from 2.35 in the Fall of 2020 and 1.91 five years ago in the Spring of 2016.
The following graph illustrates continued weakness <3.0 in economic resilience - the black line, but steady improvement over the last five years particularly in the spring of 2021 in parallel with the changing price of oil. That the price of oil would be relevant is reinforced in comments accompanied this survey question. While recognizing that diversification has been improving, the oil and gas industry continues to be significant driver of the Alberta economy.
The associated word cloud drawn from comments regarding economic resilience reflects numerous views that the economy remains overly sensitive/ vulnerable to the plight of the oil and gas industry. Also frequently mentioned are an increasing role of agriculture in the economy, the impact of Covid in devastating tourism and the role of the Alberta government in economic diversification.
The proportion of respondents viewing the economy as Not Resilient declined significantly down from 73% down to 49%, a decrease of 24%. On the other hand, Resilience remained weak at 36%, though increased 15% from 21% in the fall. Uncertainty reflected in Neutral increased from 6% to 15%. It would appear that while Resilience improved - and though continuing weak, the decrease in Not Resilient contributed to the increase in Neutral or Uncertainty.
The most sensitive measures of Resilience continue to be Job related measures: Employment (66%) and Creation (63%) followed by Corporate Investment (57%).
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