Alberta is expected to lead Canada in economic growth in 2026, with real GDP projected to expand by 2.6% as higher oil prices and continued population growth support the province’s economy, according to a new outlook from ATB Financial.

ATB’s latest Economic Outlook forecasts that Alberta’s economy will grow significantly faster than the national economy, which is expected to post growth of just 0.8%. The revised Alberta forecast is up from the 2.1% growth projection released in December, reflecting the recent increase in oil prices linked to the conflict involving Iran.

The report says Alberta continues to outperform much of the country despite the economic disruption caused by tariffs in 2025. In addition to support from the energy sector, growth is being fuelled by strong population gains as relatively affordable housing and an improving labour market continue to attract new residents. That population growth is driving housing construction and consumer spending.

However, ATB cautions that the province is not experiencing a traditional energy boom. Energy companies are maintaining spending discipline amid uncertainty surrounding commodity prices, regulations and future pipeline capacity. The report also notes ongoing challenges, including high living costs, elevated youth unemployment and cautious business hiring ahead of the scheduled summer review of the Canada-United States-Mexico Agreement.

“Alberta is moving like a fast car restricted to the slow lane,” said Mark Parsons, vice-president and chief economist at ATB Financial. “The momentum is clear, with Alberta leading in job gains and consumer activity. However, the trade conflict, ongoing cost of living pressures, and transportation infrastructure constraints are keeping the province from hitting top gear.”

Among the report’s findings, ATB projects West Texas Intermediate crude oil prices will average US$84 per barrel this year following the closure of the Strait of Hormuz, boosting provincial revenues and nominal GDP. Despite the stronger pricing environment, producers remain cautious about committing to major new capital projects.

The outlook also highlights the potential economic impact of future energy infrastructure development. According to ATB’s modelling, major pipeline expansions and carbon capture projects associated with the Canada-Alberta memorandum of understanding could increase provincial GDP by 5.1% between 2027 and 2035 while also benefiting the national economy.

Consumer spending remains a bright spot, with Alberta recording a 5.5% year-over-year increase in retail sales during the first quarter of 2026, more than double the national average. At the same time, the report notes that rising living costs and the effects of previous inflation and interest-rate increases continue to strain many households.

ATB also points to the province’s ongoing economic diversification. While upstream energy investment remains below historical peaks, investment in downstream industries such as petrochemicals, hydrogen and food processing continues to grow. Other expanding sectors include technology, tourism, critical minerals, aviation and logistics.

“The top-line numbers tell a story of provincial economic resilience, but the day-to-day reality is that not everyone will feel the benefits,” Parsons noted. “Surging fuel and input costs are squeezing both family and business budgets. A growing job market and higher oil prices are providing a cushion, but structural improvements in investment and productivity remain vital to shifting the Alberta and Canadian economy into a faster lane.”

Pictured: Downtown Calgary

Photo: Courtesy of GWLRA

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