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CALGARY, ALBERTA--(Marketwired - May 4, 2015) - While the slide in oil prices will have a significant impact on Alberta's economy, growth should improve in 2016 according to the BMO Blue Book released today by BMO Capital Markets Economics and BMO Commercial Banking.

Much like the U.S. Federal Reserve's Beige Book, the BMO Blue Book combines the expertise of BMO's economists with information on current business conditions provided to BMO's commercial bankers by local businesspeople.

"Alberta businesses have long benefitted from resilience and a can-do attitude; the province will benefit from that positive outlook now more than ever," said Susan Brown, Senior Vice President, Alberta and NWT Divisions, BMO Bank of Montreal. "The oil and gas story dominates the picture for businesses in Alberta, but we have every confidence that the province's businesses will continue to show their strength."

"Real GDP growth is expected at just 0.4 per cent," said Robert Kavcic, Senior Economist, BMO Capital Markets. "This level is down from steady 4-per-cent-plus growth over the prior five years, a period in which the province stood head and shoulders above the rest of the country. By 2016, growth should improve again to 1.9 per cent, assuming WTI oil prices push back up above $65."

Mr. Kavcic noted that the energy sector directly accounts for roughly 25 per cent of Alberta GDP, 7 per cent of employment and almost two thirds of private non-housing capital spending. "The drop in prices will likely cut roughly 3 percentage points from provincial growth this year, largely through the capital spending channels as major producers have slashed their budgets. Oil sands production, however, is expected to hold up much better given that much of the cost of long-life projects is sunk up front. Indeed, total oil production continued to run at an 11 per cent year over year pace as of the fourth quarter, led by bitumen."

"Alberta has been through difficulties of this sort before – they have amassed war chests, they're selling equipment and they're hunkering down until conditions change. Oil and gas firms are concentrating on productivity, as they've long been philosophical about the cyclical nature of the sector – they know that higher prices will return eventually," added Ms. Brown.

Employment has held up well through the first quarter, up 2.2 per cent year over year and still among the strongest in Canada. "While resource-sector employment has slid by more than 17,000 – or 9.4 per cent – since peaking in September, the losses have been more than offset by gains in the service sector," stated Mr. Kavcic. "However, look for interprovincial migration flows to Alberta to slow considerably this year; there were a net 33,000 inward migrants in 2014, which added nearly a full percentage point to population growth."

"Other industries continue to roll along. The agriculture sector will benefit from lower fuel input costs, assuming a good growing season. Livestock, in particular, should continue to perform well with strong beef prices. Additionally, tourism will benefit from the lower Canadian dollar, with more visitors coming from the U.S. and more Canadians choosing to travel domestically," noted Ms. Brown.

Ms. Brown added that BMO's team of experts is here to help customers in the region make decisions to navigate through challenging times and make strategic investment decisions that will propel growth and drive success in the long term.

The full BMO Blue Book can be downloaded at www.bmocm.com/economics.

About BMO Financial Group

Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of approximately $672 billion as of January 31, 2015, and more than 46,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.