2004 Greater Edmonton Economic Outlook by suchenfz

VIEWS: 4 PAGES: 61

									2004
Greater Edmonton
Economic Outlook



Prepared by Economic Development Edmonton: November 18, 2003




                Edmonton
                  ]                         Alberta, Canada                         ]
                                      [D   i v e r s e]
[I   n n o v a t i v e   ]                           [C   o m p e t i t i v e   ]
                                [T   a l e n t   ]
              [G   l o b a l]
                                              [T     e c h n o l o g y   ]
      [P   r o s p e r o u s]
                                      Greater Edmonton
                                   Economic Outlook – 2004

 INTRODUCTION
EDE offers new planning tool to Greater
Edmonton businesses

                     This is the first-annual    oil and gas and tourism. You may choose to
                     Greater       Edmonton      read it all or just focus in on the information
                     Economic        Outlook     pertinent to your business. To view the
                     prepared by Economic        document "section by section": open the file,
                     Development Edmonton        click on the bookmarks tab then click on the
                     (EDE).    This     2004     section you want to view.
                     Outlook is a departure
                     from the previous four      In addition to this free print-friendly PDF
                     years     when       the    format, the Outlook is also available, by
Conference Board of Canada was retained to       request, in a PowerPoint version. This will be
compile and present an economic outlook for      of interest to companies that wish to use
Greater Edmonton.                                economic      forecast   information    about
                                                 Edmonton in business presentations. See the
This year we have decided to take a different    contact information at the end of this
approach by providing a concise summary of       document.
forecasts from the Conference Board of
Canada (CBoC), the major Canadian banks,         We trust this new planning tool will help you
Alberta Economic Development (AED) and           achieve your business goals in 2004.
the City of Edmonton Forecast Committee
(ESEO).

Our primary goal is to inform small- and
medium-size enterprises in Greater Edmonton
that do not always have the time or resources
to thoroughly review different economic
projections. We are confident that you will       Allan Scott
find this 2004 Outlook a valuable business-       President and CEO
planning tool.                                    Economic Development Edmonton

The 2004 Outlook begins with an overview
incorporating key points from the sources
listed above followed by these topic sections:
GDP; labour force, inflation, interest rates,
income, retail, sales, housing, migration,
corporate profits, investment, exchange rates,



November 18, 2003                                                        Introduction: Page 1 of 1
                                        Greater Edmonton
                                     Economic Outlook – 2004

 OVERVIEW

                                                   assessment of the reasonableness of the
                HIGHLIGHTS
                                                   Edmonton forecasts. The forecasts for Alberta
                                                   project growth in a range of 2.5% - 4.2% in
 Strong oil and gas sector will
                                                   2003, 3.5% - 4.1% in 2004, and 2.8% - 4.2%
 continue to drive Edmonton’s                      in 2005. Clearly there is alignment between
 economy to greater heights.                       the Edmonton and Alberta forecasts.
                                                   Forecasters position Alberta as one of the
 Housing market            expected      to        provincial growth leaders in Canada. Growth
 remain robust.                                    projections for Canada are as follows: 1.8% -
                                                   2.1% in 2003, 2.7% -3.5% in 2004, and 2.9% -
 Net-migration may be slowing;                     3.4% in 2005. Canada’s growth in 2003 will
 could lead to labour shortages.                   be less than in the U.S. for the first time since
                                                   1998. The improved performance of the U.S.
                                                   economy is expected to continue in 2004 and
GROWTH PROJECTIONS                                 2005. Projected U.S. growth in 2003 is 2.3% -
                                                   3.0%, 3.9% - 4.4% in 2004, and 3.5% - 3.8%
Economic growth projections for Greater            in 2005. Note the similarity in the projections
Edmonton continue to be extremely positive!        for Edmonton and Alberta to those for the
Even though Edmonton achieved growth in            U.S. This further reinforces TD Economics
excess of 3% in five of the last six years, the    recent characterization of the Edmonton –
economic roll, which has produced Greater          Calgary corridor as “Canada’s western tiger”.
Edmonton’s longest period of sustained
growth in the last quarter century, is projected   OTHER INDICATORS
to continue through at least 2005.
                                                   In addition to GDP there are several other
In its Autumn 2003 Metropolitan Outlook the        indicators that define the economic
Conference Board of Canada forecasts GDP           environment within which business and
growth for Greater Edmonton of 3.0% in             government will operate. Several key
2003, 4.5% in 2004 (first among Canada’s           indicators are briefly addressed below, and
major cities), and 2.9% in 2005. The growth        more detailed information is available for
forecasts from the City Forecast committee         these and other indicators in the topic sections
are very similar – 3.1% in 2003, 3.7% in 2004      of the Overview.
and 3.4% in 2005.
                                                   Labour Force: Employment in Greater
The Conference Board and the City Forecast         Edmonton is projected to increase by 2% in
Committee produce the only published               2004 and between 1.6% and 2.1% in 2005.
forecasts for Greater Edmonton. In the             This translates into about 11,000 new jobs in
absence of other forecasts for Edmonton,           2004. Unemployment projections range
forecasts for Alberta can provide an
November 18, 2003                                                               Overview: Page 1 of 5
                                        Greater Edmonton
                                     Economic Outlook – 2004

between 5.1% and 5.6% for 2004 and between         4.2% and then increase to just under 5% in
5.0% and 5.8% in 2005. Greater Edmonton            2004.
will have one of the lowest unemployment
rates of any major Canadian metro region.          Housing Starts: Greater Edmonton has been
                                                   enjoying a phenomenal housing market with
Inflation: The increase in the Consumer Price      12,582 total starts in the region in 2002, an
Index (CPI) in Alberta and Edmonton in 2003        increase of 60% over 2001. The Conference
has been much greater than for Canada. For         Board’s most recent forecast expected housing
2003 the Edmonton CPI is expected to               starts to decline to 8,900 in 2003 and 7,000 in
increase between 5.3% and 5.6% whereas the         2004. By comparison the City Forecast
Canadian CPI is expected to increase by about      Committee is estimating total housing starts of
2.9%. Expectations for 2004 are that the           12,100 in 2003 and 11,300 in 2004.
Edmonton CPI will retreat to between 2.0%
and 3.5%, while the Canadian CPI will likely       A LOOK BACK AT 2003
be about 1.9%. These forecasts reflect the fact
that core inflation in Canada was at 3.3% in       At this time last year the forecasts of
January 2003 but declined to 1.8% on an            economic      growth     in    Canada      were
annual basis in July. This was the largest         considerably more optimistic than has
decline in Canada in twenty years. Economic        transpired. In it’s Fall 2002 Metropolitan
slack and the waning impact of auto insurance      Outlook the Conference Board forecast
and electricity increases in 2002 contributed to   growth in 2003 of 5.1% (now 4.2%) for
the decline.                                       Alberta, and 4.1% (now 3.0%) for Edmonton.
                                                   These forecasts turned out to be optimistic
Interest Rates: Early in 2003 the Bank of          largely as a result of unexpected events. In
Canada increased its overnight interest rate by    Alberta these included a decline in travel as a
50 basis points. However, as the economy           result of SARS in Toronto; the curtailment of
slowed due to unexpected shocks it reversed        cattle and beef exports due to the discovery of
course and removed the interest rate increase      one case of BSE; and the 18% appreciation of
during the summer. Going forward to 2004           the Canadian dollar against the U.S. dollar,
there are some differences in opinion as to        taking the Canadian dollar to its highest level
whether the Bank of Canada is likely to            since January 1994. Other shocks that had
increase its rate, thereby driving up the prime    little impact on Alberta but did impact the
rate charged by the chartered banks, and if so     Canadian economy included the blackout in
when. As a result the expectations for the         Ontario and the forest fires and floods in B.C.
average prime rate in 2004 vary between 4%         The realization that the Canadian economy
and 6.5%.                                          was able to cope with these unexpected
                                                   shocks, resulting in a decreased rate of growth
Retail Sales: From 2000 – 2002 retail sales in     rather than slipping into recession, is a
Greater Edmonton increased more than 7%            testament to the strength of the current
annually. Current projections are for retail       economic cycle.
sales to slow in 2003 to a still very healthy


November 18, 2003                                                            Overview: Page 2 of 5
                                        Greater Edmonton
                                     Economic Outlook – 2004

Unlike Canada, most of the forecasts for the       existing wells and in search of new supply.
U.S. from a year ago turned out to be              The BMO Financial Group has estimated that
conservative, with revised forecasts up by         this surge in drilling activity has resulted in a
0.5% - 0.7%. The U.S. economy was sluggish         19% increase in oil and gas servicing output in
in the first half of the year but has rebounded    2003, and expects a 17% increase in 2004 and
strongly in the second half. Factors driving       beyond. This is the strongest rate of growth
this resurgence include the following:             projected for any Canadian industry sector in
    strong consumer spending as a result of        2004.
    both low interest rates and disposable
    income increases due to income tax cuts,       The other anchor of the oil and gas sector in
    increased business investment, and             Alberta is the oilsands. AED’s major projects
    the weaker U.S. dollar.                        list currently includes oilsands related projects
                                                   that represent an investment of approximately
BEHIND THE NUMBERS – GREATER                       $50 billion. While not all of the announced
EDMONTON’S ECONOMIC DRIVERS                        projects are likely to be completed, AED
                                                   estimates that oilsands development should
Many factors have an impact on the economic        result in an annual average investment of
growth of a region The following appear to be      approximately $4 billion for the next ten or
the most prominent drivers of Greater              more years.
Edmonton’s current economic climate.
                                                   2. High Disposable Incomes
1. Oil and Gas Sector Investment
                                                   In its report The Calgary-Edmonton Corridor
Business investment in the oil and gas sector –    the TD Bank Financial Group made the
(both traditional drilling and oilsands            following observation, “The Calgary-
development), is the principal driver. This        Edmonton Corridor is in a unique position in
investment is expected to continue into 2004       Canada. Specifically, it is the only Canadian
and beyond. The price of oil has averaged          urban centre to amass a U.S.-level of wealth
about $30/barrel in 2003 and is expected to        while preserving a Canadian-style quality of
remain in the $25 to $27 range in 2004. At the     life. At nearly US$40,000, GDP per capita in
same time natural gas moved up strongly in         the region is about 10 per cent above the
2003 with average prices above $6/GJ. Gas          average of U.S. metropolitan areas, and a
prices are expected to decline somewhat in         striking 40 per cent above its Canadian
2004 and 2005, but not by a great deal, as gas     colleagues.” This high level of disposable
prices have been driven up by a combination        income results both from low taxation levels
of declining gas reserves and strong demand.       and strong consistent job creation. It provides
                                                   strong consumer confidence that translates
These high prices have precipitated increased      into buoyant retail sales. Strong consumer
investment in drilling activity (33% increase      demand has enabled Edmonton and Alberta to
in active drill rigs in the first nine months of   ride through recent economic slowdowns.
2003), both to increase production from            High disposable incomes also are attracting a


November 18, 2003                                                              Overview: Page 3 of 5
                                        Greater Edmonton
                                     Economic Outlook – 2004

steady influx of migrants from other parts of      the housing sector resulting in a rapid
Canada. This influx is needed to provide the       slowdown in new housing starts. This would
required workforce to support growth.              decrease construction activity slowing
Without these migrants there would be a            economic growth. A reduction in net
labour shortage that would constrain economic      migration would also result in a tighter labour
growth and increase inflation.                     market, returning Edmonton to the conditions
                                                   experienced in 2002. Finding and retaining
3. Low interest Rates                              workers would become an even greater
                                                   challenge for local business.
Edmonton, as does all of North America, finds
itself in a position where the interest rates on   b. Maturing of the Housing Market
consumer and business loans is at or near
record lows. The impact of this monetary           The Edmonton housing market has been
policy has been to stimulate the purchasing of     extremely buoyant for several years. A recent
high-priced durables – primarily houses and        report from Statistics Canada found that the
cars. In Greater Edmonton housing starts have      per capita investment in new housing in
been at record levels in 2002 and 2003. This       Alberta has been much greater than the
has provided a strong boost to the construction    Canadian average since 1997, with a surge in
industry that has made a real contribution to      2002, and most likely 2003, since housing
the sustained economic growth of the region.       starts in 2003 are similar to those in 2002. The
                                                   influx of migrants to the province, and the low
FORECAST RISKS                                     interest rates, have both contributed to this
                                                   trend. Nevertheless, there is an expectation
As we have witnessed in 2003, forecasts can        among forecasters that at some point housing
prove to be high or low as a result of many        demand (from persons already residing in the
different factors. Some factors are predictable,   region that are either first-time buyers, or
others, such as BSE and SARS, are not. What        buyers looking to upgrade) will mature. At
follows are EDE’s views on those factors that      that point the demand for new housing could
warrant close scrutiny in 2004 as they could       dramatically slow, even without an
have positive or negative impacts on the           appreciable change in the interest rates or a
forecasts for Greater Edmonton. The arrow          change in the migration patterns. That would
indicates the probable direction of the impact.    bring about a slowdown in the construction
                                                   industry. Housing starts will be an important
a. Decline in Net Migration                        barometer of this possible change.

The data for the first half of 2003 suggest that   c. Extended Closure of Export Markets to
net migration to Alberta has slowed. This             Beef and Cattle
likely reflects improving economic conditions
in other parts of the country, making a move       The forecasts reviewed for this Outlook
to Alberta less attractive. A sustained in-        generally assume that the impact of BSE will
migration slowdown could take the heat off         disappear sometime in the Fall of 2003. While


November 18, 2003                                                             Overview: Page 4 of 5
                                        Greater Edmonton
                                     Economic Outlook – 2004

the U.S. has permitted limited types of beef       e. Soaring Oil Prices
exports to cross the border, extensive
movement of beef exports into the U.S. may         The general expectation is that oil prices will
not happen until well into the Spring of 2004.     decline in 2003 as a result of greater stability
Movement of live cattle is likely to take even     in the supply of Middle East oil. If the current
longer. This delay in re-opening the border        instability in Iraq and elsewhere in the region
would have a negative impact on these              were to worsen it is possible that oil prices
forecasts. If the delays in reopening the border   will rise. It is also possible that if the U.S.
force the cattle industry into extensive           economy grows faster than predicted, or there
restructuring, the speed with which the            is an exceptionally cold winter, there could be
industry is able to recover will be impacted.      demand pressures that increase the price of
This would mean that the negative drag on the      oil. If oil prices increase for any of these
economy from this problem would continue           reasons the short-term economic impact for
for a longer period of time.                       Alberta will be positive. Business and
                                                   consumers would take a hit from higher
d. Lack of Success in Finding New Oil and          energy costs but the Alberta government
   Gas Fields                                      would also experience windfall revenue
                                                   surpluses. With its low debt these revenue
As described above, the current high oil and       surpluses would provide it with the
gas prices have resulted in a surge in drilling    opportunity to increase one-time investment in
activity. Some of this drilling activity is to     infrastructure     and    programs,     thereby
enhance recovery from existing fields while        increasing economic activity.
other activity is targeted at locating new
fields. Repeated failure in finding new            CONCLUSION
economically viable fields would put
downward pressure on future drilling activity.     The economic fundamentals – high oil and gas
Indeed, some of the larger players in the oil      prices and a surging U.S. economy – are in
exploration sector have already reduced their      place for Greater Edmonton to continue its
activity in Alberta in favour of promising         current economic roll. For these reasons it is
opportunities in other locations in Canada and     well positioned to continue in 2004 as one of
other countries. Reduced investment by the oil     the top economic growth leaders in urban
services sector would have a significant           Canada. There are potential downside risks to
impact on the Greater Edmonton economy.            the forecast. Nevertheless, these downside
Moreover, if this reduced investment was the       risks appear to have greater applicability to the
result of business having reduced confidence       medium and long-term prospects for Greater
in their ability to find viable new oil and gas    Edmonton.
fields, the negative impact would be long-
term, not short-term.




November 18, 2003                                                              Overview: Page 5 of 5
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 GDP


                         GDP Forecasts - International
                               Projected Growth in Real GDP by Region and
                                               Forecaster
                             Region     Scotia    BMO        TD       AED
                                UK
                               2003      1.9%     2.1%      1.7%     2.0%
                               2004      2.4%     3.0%      2.4%     2.5%
                            Euro Zone
                               2003      0.2%     0.6%      0.6%     1.1%
                               2004      1.6%     2.0%      1.6%     2.4%
                              Japan
                               2003      2.5%     2.6%      2.0%     0.6%
                               2004      1.4%     2.0%      1.3%     1.1%
                              China
                               2003               8.5%               7.5%
                               2004               7.8%               7.6%

            Sources: institutions listed above




   Euro-zone growth is weak in 2003. Only               China continues its torrid growth. Latest
   modest recovery is expected in 2004.                 numbers may show that it has become the
                                                        second largest exporter to the U.S. behind
   Japan is finally showing signs of shaking            Canada.
   off its decade of weak performance.
   Consumer and business expenditures are               The next page shows that projected growth
   up. Structural changes within business are           for Canada and the U.S. is greater than for
   taking hold.                                         the U.K, Euro Zone and Japan.




November 18, 2003                                                                 GDP: Page 1 of 8
                                               Greater Edmonton
                                            Economic Outlook – 2004



                    GDP Forecasts – North America
                         Projected Growth in Real GDP by Region and Forecaster
                     Region     RBC    Scotia    BMO      TD      CBOC      ESEO
                       US
                      2003      2.7%    3.0%     2.9%    2.7%                2.3%
                      2004      3.9%    4.0%     4.4%    4.3%                4.0%
                      2005                       3.8%                        3.5%
                     Canada
                      2003      2.1%    1.9%     2.0%    1.8%     1.9%       2.0%
                      2004      3.5%    2.7%     3.3%    3.0%     3.2%       3.5%
                      2005                       3.4%             2.9%       3.0%
                     Alberta
                      2003      3.8%    3.0%     2.5%    3.0%     4.2%       3.0%
                      2004      4.1%    3.5%     4.0%    3.7%     3.6%       4.0%
                      2005                       4.2%             2.8%       3.7%
                    Edmonton
                      2003                                        3.0%       3.1%
                      2004                                        4.5%       3.7%
                      2005                                        2.9%       3.4%

               Sources: institutions listed above




   The forecasts that have been reviewed all               Each forecaster is projecting the U.S. to
   agree on the direction that the economy                 have stronger growth than Canada in 2004,
   will take in 2003 and 2004, in each of the              and for Alberta to also have stronger
   U.S., Canada, Alberta, and Edmonton.                    growth than Canada in 2004.

   The forecasts are unanimous in their                    A few brief comments regarding the U.S.,
   expectation that all jurisdictions will                 Canada and Edmonton forecasts will be
   experience higher growth in 2004 than                   found in the following few pages.
   was experienced in 2003.




November 18, 2003                                                                   GDP: Page 2 of 8
                                                          Greater Edmonton
                                                       Economic Outlook – 2004



                                                 Real GDP Growth Rate
                                                        U.S. 1995–04 (%)
                                        6

                                        5
                      Growth Rate (%)




                                                                                                  3.8
                                        4

                                        3
                                                                                            2.3
                                        2

                                        1

                                        0
                                            95    96   97   98   99   00     01        02   03f   04f




              Sources: Regional Financial Associates, Inc.; CBoC; Statistics Canada.




   US recovery is finally taking hold. This is                        Progress in stabilizing and rebuilding Iraq
   the result of low interest rates and tax                           is likely to have a direct bearing on
   reductions.                                                        consumer and business confidence.

   Business investment in technology is on                            The ballooning US deficit – expected to
   the increase, defence spending is up.                              swell to $500 billion in fiscal 2004 – has
   These have also contributed to the                                 many analysts nervous about the U.S.
   recovery.                                                          ability to sustain this growth.




November 18, 2003                                                                                       GDP: Page 3 of 8
                                                       Greater Edmonton
                                                    Economic Outlook – 2004



                                               Real GDP Growth Rate
                                                         Canada 1995–05
                                      5

                                      4
                    Growth Rate (%)




                                                                                        3.2
                                                                                              2.9
                                      3
                                                                                  1.9
                                      2

                                      1

                                      0
                                          95   96   97   98   99   00   01   02   03f   04f    05f


              Sources: The Conference Board of Canada; Statistics Canada.




   The Conference Board’s Winter 2003                              The growth drivers in 2004 include low
   Metropolitan Outlook forecast the                               interest rates, the strong US economy (this
   Canadian GDP growth rate in 2003 to be                          will bolster Canadian exports thereby
   3.5%. The growth rate was reduced to                            offsetting the export declines brought on
   1.9% in the Conference Board’s recent                           by the appreciating Canadian dollar) rising
   Autumn forecast. This was a result of the                       non-energy commodity prices, and an
   rapid rise of the dollar, SARS, BSE, and                        increase in household wealth.
   sluggish US growth.




November 18, 2003                                                                             GDP: Page 4 of 8
                                                 Greater Edmonton
                                              Economic Outlook – 2004


                                  Edmonton GDP Growth Rate
                         12.0
                         11.0
                         10.0
                                  Edmonton CMA
                          9.0
                          8.0
            % increase




                          7.0
                          6.0
                                                                                       4.5
                          5.0
                          4.0                                                    3.0         2.9 2.7
                          3.0
                          2.0
                          1.0
                          0.0
                         -1.0
                                88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03f 04f 05f 06f

                                    Actual    Forecast
             The Conference Board of Canada, Metropolitan Outlook, Autumn 2003




   This is the longest period of sustained                        Edmonton growth will get an extra boost
   economic growth since the Conference                           from strong investment in oil and gas
   Board began measuring GDP output by                            servicing.
   metropolitan region in 1988.
                                                                  Construction market expected to stay very
   The Conference Board forecast is for GDP                       strong due to low interest rates.
   growth in Greater Edmonton to exceed 3%
   annually through 2004.                                         Full-employment levels bolster consumer
                                                                  confidence thereby enhancing consumer
   Maintaining annual growth of at least 3%                       spending.
   is the goal.




November 18, 2003                                                                                 GDP: Page 5 of 8
                                             Greater Edmonton
                                          Economic Outlook – 2004



                       Major Cities Growth Ranking

                               2000        2001        2002      2003f          2004f   2005f

              Edmonton              2          2           5           3           1       5

              Calgary               1          1           3           1           2       2
              Toronto               3          4           2           6           3       1
              Vancouver             4          6           4           2           6       3
              Winnipeg              6          3           6           4           5       6
              Montreal              5          5           1           5           4       4




          Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   The Conference Board originally projected                    Key message is solid consistent
   Edmonton to be #1 for growth in 2002.                        performance is in place in Edmonton.
   We slipped to fifth due to a softening of
   oil prices that saw investment decline in
   the oil and gas services sector.




November 18, 2003                                                                               GDP: Page 6 of 8
                                                  Greater Edmonton
                                               Economic Outlook – 2004



                         Edmonton GDP By Industry -
                                   2002
                                                                   Primary
                                        Public Administration        9%              Manufacturing
                            Non-Commercial       6%                                      11%
                               Services
                                 9%

              Commercial Services                                                                    Construction
                   13%                                                                                   8%



                                                                                                     Utilities
                                                                                                       2%


                                                                                         Transportation &
                        Finance` Insurance &                    Wholesale & Retail        Communication
                             Real Estate                             Trade                     9%
                                22%                                   11%


            Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   The Edmonton              economy           is    quite              A significant portion of manufacturing
   diversified.                                                         output is accounted for by the production
                                                                        of Edmonton’s petroleum refineries.
   The Conference Board of Canada has
   developed a diversity index for
   communities. The index measures the
   distribution of employment by industry
   within a community against the
   distribution of employment by industry
   within Canada. From one forecast to the
   next, Edmonton ranks first or second on
   that diversity index.




November 18, 2003                                                                                                GDP: Page 7 of 8
                                                     Greater Edmonton
                                                  Economic Outlook – 2004



                        Annual GDP Growth by Industry
                                                              Edmonton CMA


                                                   1998      1999      2000       2001      2002     2003f   2004f    2005f
               Goods                               4.3%      2.4%      1.1%       0.4%      2.6%     4.4%    4.1%     3.3%
               Primary                             8.5%    (10.6%)    14.1%      (8.8%)    (1.4%)    6.6%    3.0%     3.8%
               Manufacturing                      (5.3%)    15.2%    (12.5%)      3.8%      5.5%     2.1%    5.7%     3.2%
               Construction                       18.8%      0.7%     (3.1%)     23.5%      7.8%     2.7%    3.9%     2.9%
               Utilities                          (0.8%)     7.1%     28.8%     (24.7%)   (11.1%)   12.9%    1.1%     3.3%
               Services                            6.5%     (0.8%)     8.3%       4.9%      3.3%     2.3%    4.7%     2.6%
               Transportation & Communication      5.8%     (9.3%)    17.0%       2.2%     (2.5%)    2.9%    5.9%     2.4%
               Wholesale & Retail Trade           (2.2%)    (3.8%)    18.7%       6.1%      3.7%     3.2%    6.1%     3.1%
               Finance` Insurance & Real Estate   19.2%     (5.2%)     6.8%       4.3%      6.2%    (0.5%)   4.7%     2.3%
               Commercial Services                 2.1%      6.0%      9.9%      (0.1%)     6.5%     4.4%    3.5%     2.7%
               Non-Commercial Services             5.4%      5.0%     (3.2%)     11.0%      0.4%     3.0%    4.6%     2.9%
               Public Administration              (5.1%)    11.6%     (0.4%)     11.1%     (0.9%)    4.0%    3.3%     3.0%
               Total GDP                           5.7%      0.3%      5.9%       3.4%      3.0%     3.0%    4.5%     2.9%




              Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   These are the standard industry groupings                                   Note that in 2004 and 2005 all industries
   used by Statistics Canada.                                                  are expected to share in Edmonton’s
                                                                               growth.
   Edmonton’s proportion of the total Alberta
   GDP for each industry is directly related to
   Edmonton’s     share      of     provincial
   employment in the industry.




November 18, 2003                                                                                                    GDP: Page 8 of 8
                                                  Greater Edmonton
                                               Economic Outlook – 2004

 LABOUR FORCE



                      Employment Growth Forecasts
                       Projected Growth in Employment by Region and Forecaster

                       Region          RBC     Scotia   BMO    TD     CBOC   ESEO
                         US
                        2003          -0.3%    -0.3%
                        2004           0.9%     0.7%
                        2005
                       Canada
                        2003          2.0%     2.0%     2.0%   2.1%   1.8%
                        2004          1.3%     0.7%     1.5%   1.6%   1.8%
                        2005                            1.2%          1.7%
                       Alberta
                        2003          2.4%     2.5%     2.6%   2.8%   2.3%
                        2004          2.0%     2.0%     2.5%   2.5%   1.9%
                        2005                            2.2%          1.6%
                      Edmonton
                        2003                                          1.9%   2.6%
                        2004                                          2.0%   2.0%
                        2005                                          1.6%   2.1%
          Sources: institutions listed above




   The forecasters agree on the direction of                    This means that the U.S. labour
   job creation in each jurisdiction. There is                  productivity advantage compared to
   also little disagreement on the magnitude                    Canada will further increase.
   of the growth, as most of the forecasts are
   within 0.5 percentage points of each other.
   While the U.S. is projected to lead in GDP
   growth, it is projected to lag Canada in job
   creation.




November 18, 2003                                                              Labour Force: Page 1 of 7
                                                Greater Edmonton
                                             Economic Outlook – 2004



                             Edmonton: Employment Growth
                                           (annual percentage change)

                            6
                            5
                            4
                 % change




                            3
                                                                                1.9   2.0
                            2                                                               1.6
                            1
                            0
                            -1
                                 95   96    97   98    99     00     01    02   03f   04f   05f


             Sources: The Conference Board of Canada; Statistics Canada.




   Edmonton is projected to have solid                             Note the impressive annual job creation
   employment growth through 2004, but at                          that Edmonton has been experiencing
   reduced levels from 2001 and 2002.                              since 1996.




November 18, 2003                                                                     Labour Force: Page 2 of 7
                                                                                       Greater Edmonton
                                                                                    Economic Outlook – 2004


                                                  550
                                                               Strong Employment Growth
                                                  530
                                                         Edmonton CMA
                                                  510                                  "Declaration of Opportunity"
                                                                                                Signed for
              Employed Labour Force (thousands)




                                                                                       Oilsands Development, June
                                                  490                                                                                                    67,000
                                                                                                  3,1996

                                                  470


                                                  450


                                                  430


                                                  410


                                                  390


                                                  370


                                                  350
                                                        1990   1991   1992   1993   1994     1995   1996    1997    1998   1999   2000   2001    2002
                                                                                       Pre      Post       Trend (Pre)     Trend Post

            Sources: Statistics Canada, Labour Force Survey



   The line named Trend (Pre) shows the                                                                            “Declaration of Opportunity” for Oilsands
   employment growth trend in Edmonton in                                                                          Development in 1996 marked a turning
   the seven years from 1990 through 1996.                                                                         point in Greater Edmonton’s economy and
   The line named Trend (Post) shows the                                                                           employment growth.
   employed growth trend in Edmonton in
   the seven years from 1996 through 2002.                                                                         Oilsands development is clearly a major
   The difference in the two lines in 2002 is                                                                      driver of Greater Edmonton’s current
   about 67,000 jobs. This is an                                                                                   prosperity.
   approximation of the increase in
   employment in Greater Edmonton as a
   result of the oilsands development since
   1996.




November 18, 2003                                                                                                                               Labour Force: Page 3 of 7
                                                Greater Edmonton
                                             Economic Outlook – 2004


                    Growth in Edmonton Employment by
                                 Industry
                                    Industry                    1999    2000    2001    2002 2003 - YTD
              Accommodation and Food Services                     -2%     22%      2%      3%        3%
              Agriculture                                         -7%    -27%    -55%     28%      -12%
              Construction                                        10%     -4%     22%      9%       -1%
              Educational Services                                 9%     -3%     13%      0%        2%
              Finance, Insurance, Real Estate and Leasing          7%     -5%      8%      0%        0%
              Forestry, Fishing, Mining, Oil and Gas             -39%      8%     14%     -6%       -7%
              Health Care and Social Assistance                   -1%     -4%      1%      9%       -1%
              Information, Culture and Recreation                -16%    -14%     -2%      6%       -4%
              Management, Administrative and Other Support        -9%      2%    -14%     33%       -5%
              Manufacturing                                       26%    -15%      6%     10%       -1%
              Other Services                                      -9%      4%    -10%     -7%        3%
              Professional, Scientific and Technical Services     11%     -8%      8%      6%        0%
              Public Administration                               -3%      0%      7%      2%       -2%
              Trade                                                1%      8%      0%     -3%        0%
              Transportation and Warehousing                       2%     14%      3%     -9%        2%
              Utilities                                           42%     27%    -14%     13%        1%



            Sources: Statistics Canada, Labour Force Survey




   Industries with a small number of                               No industry has experienced employment
   employees can experience significant                            growth in each of the years.
   changes in employment from one year to
   the next, i.e. Agriculture.




November 18, 2003                                                                        Labour Force: Page 4 of 7
                                                    Greater Edmonton
                                                 Economic Outlook – 2004



                       Unemployment Rate Forecasts
                                  Projected Unemployment by Region and Forecaster
                     Region         RBC       Scotia  BMO         TD      CBOC        ESEO
                       US
                      2003          6.1%         6.1%   6.0%     6.1%
                      2004          6.0%         6.2%   5.8%     5.6%
                      2005                              5.3%
                     Canada
                      2003          7.7%         7.8%   7.7%     7.7%      7.9%
                      2004          7.7%         8.3%   7.7%     7.5%      7.8%
                      2005                              7.6%               7.7%
                     Alberta
                      2003          5.3%         5.3%   5.2%     5.3%      5.5%
                      2004          5.3%         5.2%   5.0%     4.9%      5.5%
                      2005                              5.0%               5.6%
                    Edmonton
                      2003                                                 5.7%       5.0%
                      2004                                                 5.6%       5.1%
                      2005                                                 5.8%       5.0%

            Sources: institutions listed above




   Forecast    unemployment   rates  are                       There is some disagreement among
   considerably lower in Alberta than in                       forecasters as to the direction that the
   Canada or the U.S.                                          unemployment rate is likely to take in
                                                               Canada in 2004.




November 18, 2003                                                                   Labour Force: Page 5 of 7
                                                               Greater Edmonton
                                                            Economic Outlook – 2004



                                             Edmonton: Unemployment Rate
                                                                      1994–05
                                             12
                                             11
                                                                                Very tight labour
                     unemployment rate (%)




                                             10
                                                                                market
                                             9
                                             8
                                             7
                                             6
                                             5
                                             4
                                                  94   95   96   97   98   99   00   01   02   03f   04f   05f



              Sources: The Conference Board of Canada; Statistics Canada.




   The decline in the unemployment rate is                                  This combination of low unemployment
   due to the sustained economic growth in                                  and high participation presents a challenge
   Edmonton which has produced strong job                                   in achieving year-over-year economic
   creating as shown on page 3 of this                                      growth. Improved productivity and/or an
   section.                                                                 influx of new workers is needed.

   The increase in the unemployment rate in                                 At this level of unemployment retaining
   2003 has somewhat eased the labour                                       employees is a real challenge. Resulting
   shortages experienced in 2002. However,                                  wage increases, perks, and recruitment
   at this level of unemployment, the                                       costs increase operating costs.
   available labour force represents a
   constraint on economic growth.

   Edmonton       not     only    has    low
   unemployment levels it also has a high
   participation rate – the percentage of the
   working age population that is in the
   workforce.


November 18, 2003                                                                              Labour Force: Page 6 of 7
                                                                    Greater Edmonton
                                                                 Economic Outlook – 2004



                                                          Unemployment Rate
                                            9
                                            8
                    Unemployment rate (%)




                                            7
                                            6
                                            5
                                            4
                                            3
                                            2
                                            1
                                            0
                                                1998      1999   2000   2001     2002    2003f   2004f     2005f
                                                                            Year

                                                Calgary     Edmonton    Ottawa     Toronto   Vancouver     Canada


            Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   Due to Alberta’s strong economic                                                Edmonton’s unemployment rate is
   performance in recent years, Edmonton                                           forecasted to be 0.3% higher than
   and Calgary have consistently lower                                             Calgary’s through 2005.
   unemployment rates than Canada and
   other major Canadian cities.




November 18, 2003                                                                                        Labour Force: Page 7 of 7
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 INFLATION



                             Annual Inflation Forecasts
                                      Projected Inflation by Region and Forecaster
                        Region         RBC       Scotia     BMO       TD      CBOC   ESEO
                          US
                         2003           2.1%      2.3%    2.2%     2.0%
                         2004           1.8%      1.9%    1.3%     1.0%
                         2005                             1.5%
                        Canada
                         2003           2.8%      2.8%    2.8%     2.6%     2.9%
                         2004           1.5%      1.7%    1.3%     1.6%     1.9%
                         2005                             1.5%              2.1%
                        Alberta
                         2003           4.0%              4.2%     3.9%     4.7%
                         2004           1.8%              1.8%     2.0%     2.0%
                         2005                             1.9%              2.1%
                       Edmonton
                         2003                                               5.6%     5.3%
                         2004                                               2.0%     3.5%
                         2005                                               2.1%     3.0%

            Sources: institutions listed above




   Projected inflation for the US in 2003                        Both Alberta and Edmonton’s inflation
   ranges from 2.0 – 2.3%, while Canada’s                        rates are expected to decline in 2004 from
   inflation rate ranges from 2.6 – 6.9%.                        its high 2003 rates ranging between 1.8 –
                                                                 2.0% for Alberta and 2.0 – 3.5% for
   Projected inflation for both the US and                       Edmonton.
   Canada in 2004 is expected to decline in
   2003 ranging from 1.3 – 1.9% for the US                       The consensus of the forecasters is that
   and 1.8 – 2.0% for Canada.                                    inflation is well in hand and is expected to
                                                                 decline in all jurisdictions.
   Alberta and Edmonton’s forecasted
   inflation rates for 2003 are expected to be                   Higher inflation in Alberta and Edmonton
   much greater than Canada’s ranging                            that elsewhere in Canada or the US has
   between 3.9 – 4.7% for Alberta and 5.3 –                      increased costs for Alberta business and
   5.6% for Edmonton.                                            consumers.




November 18, 2003                                                                           Inflation: Page 1 of 5
                                                    Greater Edmonton
                                                 Economic Outlook – 2004


             Annual Inflation Rate (change in the CPI)
                         Canada 1995–05
                                      Target for Inflation is 1 to 3 per cent
                                3.5
                                3.0                                              2.9

                                2.5
               inflation rate




                                                                                              2.1
                                2.0                                                    1.9
                                1.5
                                1.0
                                0.5
                                0.0
                                      95   96   97   98   99   00      01   02   03f   04f     05f

             Sources: The Conference Board of Canada; Statistics Canada.




   Inflation is measured by calculating the                         The core inflation rate fell to 1.8% on an
   change in the Consumer Price Index (CPI),                        annual basis in July 2003. The annual rate
   which measures the change in retail prices                       in January 2003 had been 3.2%. The 1.5
   of a representative “shopping basket” of                         percentage point decline was the largest
   goods and services. The Bank of Canada                           decline in twenty years.
   targets to keep the annual inflation rate
   between 1% and 3% and will adjust                                The steep decline reflects the ebbing
   monetary policy to keep the inflation rate                       impact of the big jump in auto insurance
   within this range. In determining its                            and electricity prices in 2002; economic
   monetary policy the Bank of Canada relies                        slack resulting from SARS and BSE; and
   heavily on the core CPI. The core CPI is a                       the decreased price of imports due to the
   measure of price change that excludes the                        dollar’s appreciation.
   eight most volatile items in the CPI basket
   of goods – fruit, vegetables, gasoline, fuel
   oil, natural gas, mortgage interest, intercity
   transportation, and tobacco products.
   Together these items account for 16% of
   the CPI basket.



November 18, 2003                                                                            Inflation: Page 2 of 5
                                                         Greater Edmonton
                                                      Economic Outlook – 2004


                                                Edmonton Inflation Rate
                                                 Annual Change in the CPI: 1995-2005


                                     6.0                                               5.6
                                     5.0

                                     4.0
                    inflation rate




                                     3.0
                                                                                             2.0   2.1
                                     2.0

                                     1.0

                                     0.0
                                           95    96   97   98   99   00   01    02     03f   04f    05f


             Sources: The Conference Board of Canada; Statistics Canada.




   Edmonton’s inflation rate sky-rocketed in                           See the next page for an explanation of the
   2003. The good news is it’s not expected                            high inflation rate in Edmonton in 2003.
   to last.




November 18, 2003                                                                                  Inflation: Page 3 of 5
                                                                    Greater Edmonton
                                                                 Economic Outlook – 2004


                                                 Monthly Edmonton CPI
                                             October 1999 to September 2003
                                                       1992 = 100
                                     135.0

                                     130.0

                                     125.0
                       index value




                                     120.0

                                     115.0

                                     110.0

                                     105.0
                                                         01




                                                                                                   02




                                                                                                                                            03
                                                  00




                                                                                           01




                                                                                                                                    02




                                                                                                                                                                03
                                           00




                                                                 1




                                                                                     01




                                                                                                          2




                                                                                                                              02




                                                                                                                                                   3
                                                                      01

                                                                              01




                                                                                                               02

                                                                                                                       02




                                                                                                                                                        03
                                                              00




                                                                                                        00




                                                                                                                                                 00
                                                       20




                                                                                                20




                                                                                                                                         20
                                                20




                                                                                          20




                                                                                                                                   20




                                                                                                                                                             20
                                         20




                                                                           20

                                                                                   20




                                                                                                                    20

                                                                                                                            20
                                                                     20




                                                                                                              20




                                                                                                                                                       20
                                                            r2




                                                                                                     r2




                                                                                                                                              r2
                                                     b




                                                                                               b




                                                                                                                                        b
                                             ec




                                                                                     ec




                                                                                                                              ec




                                                                                                                                                            g
                                      ct




                                                                                ct




                                                                                                                         ct
                                                                          g




                                                                                                                   g
                                                                 n




                                                                                                          n




                                                                                                                                                   n
                                                         Ap




                                                                                                   Ap




                                                                                                                                            Ap
                                                  Fe




                                                                                           Fe




                                                                                                                                    Fe




                                                                                                                                                        Au
                                                                      Au




                                                                                                               Au
                                                              Ju




                                                                                                        Ju




                                                                                                                                                 Ju
                                     O




                                                                              O




                                                                                                                       O
                                           D




                                                                                     D




                                                                                                                              D
                Source: Statistics Canada, Consumer Price Index, 1996 basket content; Edmonton, Alberta; All-items




   The chart shows the monthly CPI for                                                                  Since March 2003 the index has been flat.
   Edmonton for the past 36 months.                                                                     This is why it looks like the CPI will
                                                                                                        return to the target levels in 2004.
   The CPI declined in the fourth quarter of
   2001 due to the economic slowdown that
   resulted from the September 11th terrorist
   attack and the impact of provincial
   government energy rates. The monthly
   CPI steadily increased through the second
   and third quarters of 2002. It grew even
   faster in the last quarter as the energy
   rebates were terminated. There was further
   growth in the first quarter of 2003, but
   since then the monthly change has
   stabilised.




November 18, 2003                                                                                                                                           Inflation: Page 4 of 5
                                                                  Greater Edmonton
                                                               Economic Outlook – 2004


                                      Percent Change in the Monthly CPI
                                     Canada and Edmonton January 2001
                                              to September 2003
                                                  1992 = 100
                             12

                             10

                              8
            Percent Change




                              6

                              4

                              2

                              0

                             -2
                                   Jan Mar   May   Jul   Sep   Nov    Jan Mar     May   Jul   Sep   Nov    Jan Mar   May   July   Sep
                                  2001                               2002                                 2003
                             -4

                                                                         Canada    Edmonton




            Source: Statistics Canada, Consumer Price Index, 1996 basket content; Edmonton, Alberta; All-items




   This chart compares the monthly year-                                                  Upward pressure on the CPI in Edmonton
   over-year change in the Consumer Price                                                 is also being applied by the robust
   Index (CPI) for both Edmonton and                                                      economy and tight labour market.
   Canada. It clearly shows how the monthly
   inflation rate in Edmonton has been much
   greater than the monthly Canadian
   inflation rate since October of 2002. The
   elimination of the Provincial energy
   rebates was a major contributor as
   Edmonton energy costs jumped to the
   level that other parts of Canada were
   experiencing.




November 18, 2003                                                                                                           Inflation: Page 5 of 5
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 INTEREST RATES



                         Prime Interest Rate Forecasts

                             Projected Interest Rates by Region and Forecaster
                           Region                Scotia   BMO           ESEO
                             US
                            2003                  4.1      4.1
                            2004                  4.0      4.5
                            2005                           6.8
                           Canada
                            2003                  4.7                    4.8
                            2004                  4.0                    6.5
                            2005                                         6.5




            Sources: institutions listed above




   Forecast prime rates for the US are                    prime rate. While both schools of thought
   identical at 4.1%. However, they vary in               expect to see little change by the Bank of
   2004 between 4.0 – 4.5%.                               Canada in the first few months of 2004
                                                          they differ on what is likely to happen
   Forecast prime rates for Canada in 2003                thereafter. Scotiabank Group predicts that
   range between 4.7 – 4.8%. The differences              the Bank of Canada will reduce rates by
   between the forecasts for 2004 are greater             half of a percent in 2004 because of job
   ranging between 4.0 – 6.5%.                            losses and weaker economic growth. On
                                                          the other hand, BMO Financial Group
   There is some difference of opinion                    predicts the Bank of Canada’s rate will
   between forecasters regarding the likely               begin moving up in the middle of 2004
   movement of the interest rate set by the               and will increase by 1 ¾ percentage points
   Bank of Canada which in turn drives the                by the end of 2005.




November 18, 2003                                                              Interest Rates: Page 1 of 2
                                                                  Greater Edmonton
                                                               Economic Outlook – 2004



                                                 Chartered Banks Prime Rate

                                        12


                                        10
                    Interest Rate (%)




                                         8


                                         6


                                         4


                                         2


                                         0
                                          1993   1994   1995   1996   1997   1998     1999    2000   2001   2002   2003

                                                                             Canada    U.S.




              Source: Bank of Canada




   Note the very steep decline in the interest                                        The differential between the US and
   rate during 2001. This provided the                                                Canadian rates which existed between
   monetary stimulus that has spurred on the                                          Canada and the US has largely
   housing market and new car sales in 2002                                           disappeared.
   and 2003.




November 18, 2003                                                                                           Interest Rates: Page 2 of 2
                                                          Greater Edmonton
                                                       Economic Outlook – 2004

 INCOME



                                        Edmonton: Personal Disposable Income
                                                      Growth
                                                      (annual percentage change)
                                        8
                                        7
                    annual change (%)




                                        6
                                        5
                                                                                            3.7 3.6
                                        4
                                        3
                                        2                                             1.6
                                        1
                                        0
                                            95   96   97   98   99   00    01    02   03f   04f   05f


            Sources: The Conference Board of Canada, Statistics Canada.




   Edmonton’s disposable income has risen                                 Federal tax cuts and very low interest rates
   noticeably in the past five years; very                                have also contributed to this increase in
   rapid gains.                                                           2002; nothing further in this regard in
                                                                          2003 and beyond.
   A     red-hot     economy,   significant
   employment growth, and Alberta’s low tax
   base are the main reasons.




November 18, 2003                                                                                  Income: Page 1 of 2
                                                      Greater Edmonton
                                                   Economic Outlook – 2004



                                        Personal Disposable Income Per
                                                     Capita
                               33,000
                                                                                              Calgary
                               31,000
                                                                                              Ottawa
                               29,000
                                                                                              Toronto
                               27,000                                                         Edmonton
            Canadian Dollars




                               25,000                                                         Vancouver

                               23,000

                               21,000

                               19,000                     Canada

                               17,000

                               15,000
                                    1999    2000   2001   2002       2003f        2004f   2005f




            Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   Overall, personal disposable income per                         Edmonton ranks fourth among the major
   capita is on the rise for Canada and its                        Canadian cities. It is now almost the same
   major Canadian cities, with Calgary                             as Toronto.
   leading the way.
                                                                   Calgary is the clear leader, reflecting its
   Edmonton’s personal disposable income                           high concentration of well paying head-
   per capita is substantially greater than the                    office jobs.
   Canadian average.




November 18, 2003                                                                             Income: Page 2 of 2
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 RETAIL SALES



                          Retail Sales Growth Forecast
                       Projected Growth in Retail Sales by Region and Forecaster
                        Region           RBC              BMO            CBOC
                        Canada
                         2003                     5.0%   4.0%            4.1%
                         2004                     4.6%   4.5%            4.6%
                         2005                            4.8%            4.6%
                        Alberta
                         2003                     4.9%   4.4%            5.3%
                         2004                     5.1%   6.5%            4.8%
                         2005                            5.6%            4.4%
                       Edmonton
                         2003                                            4.2%
                         2004                                            4.9%
                         2005                                            4.7%


            Sources: institutions listed above




   Projections for retail sales growth across            Strong retail sales growth is one of the
   Canada, Alberta, and Edmonton are very                drivers of the economic growth in Alberta
   healthy, with Alberta leading the way.                and Edmonton.

   There are noticeable differences in the
   direction and magnitude of the forecasts
   for 2004 and 2005.




November 18, 2003                                                               Retail Sales: Page 1 of 3
                                                           Greater Edmonton
                                                        Economic Outlook – 2004


                                                  Retail Sales Growth
                                                               Edmonton and Canada




                                        10.00%
                    Growth Percentage




                                        8.00%
                                        6.00%
                                        4.00%
                                        2.00%
                                        0.00%
                                                 1998   1999     2000    2001     2002     2003f   2004f   2005f
                                                                            Year

                                                                Canada          Edmonton



            Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   Edmonton has been one of the strongest                                        Edmonton and Canada are expected to
   markets in Canada for retails sales growth.                                   show similar growth patterns in retail sales
   Above average increases in both                                               over the forecast period, averaging about
   population and personal disposable                                            4.3% growth. This suggests that the
   income have contributed to Edmonton’s                                         Conference Board is expecting net
   strong growth.                                                                migration and therefore population growth
                                                                                 to slow, and personal disposable income to
                                                                                 grow at a slower rate.




November 18, 2003                                                                                            Retail Sales: Page 2 of 3
                                                    Greater Edmonton
                                                 Economic Outlook – 2004


                                                Alberta Vehicle Sales
                                35.0%

                                30.0%

                                25.0%

                                20.0%

                                15.0%
                     % change




                                10.0%

                                 5.0%

                                 0.0%

                                 -5.0%
                                         1995    1996    1997         1998    1999       2000    2001       2002   2003
                                -10.0%                                                                             (Jan-
                                                                                                                   Aug)
                                -15.0%

                                                        Total Units    Passenger Units   Commercial Units

                Source: Statistics Canada, CANSIM database




   Vehicle sales - passenger and commercial                                  A slowdown in North American vehicle
   – are both lower through the first eight                                  sales had been predicted because of the
   months of 2002.                                                           strong market in recent years that had been
                                                                             spurred on by low interest rates.
   If this trend remains unchanged through
   the remainder of 2003, it will be the first                               The drop in vehicle sales at a time when
   year since 1999 that vehicle sales have not                               disposable income growth and consumer
   increased.                                                                growth are both strong should be good
                                                                             news for other retailing and service
                                                                             sectors.




November 18, 2003                                                                                            Retail Sales: Page 3 of 3
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 HOUSING



                                Housing Starts Forecast
                             Projected Housing Starts by Region and Forecaster
                     Region     RBC      Scotia       BMO       TD       CBOC     ESEO
                       US
                      2003   1,760,000 1,790,000
                      2004   1,650,000 1,720,000
                      2005
                     Canada
                      2003    208,300   218,000     220,000 200,000 202,200
                      2004    183,000   196,000     190,000 190,000 184,300
                      2005                          175,000             178,900
                     Alberta
                      2003     37,000    37,000     38,200    37,000    36,900
                      2004     32,200    34,000     33,500    36,000    34,300
                      2005                           30,000              33,000
                    Edmonton
                      2003                                                8,900   12,110
                      2004                                                7,000   11,344
                      2005                                                6,500   10,094

            Sources: institutions listed above




   The housing markets in all four regions are              The Conference Board forecast for
   benefiting from low interest rates that are              Edmonton is much more conservative in
   driving strong consumer demand.                          2004 and 2005 than is forecast by the City
                                                            Forecast Committee. Their forecasts are at
   All four regions show housing starts                     historically high rates.
   declining as the forecast horizon increases.

   The direction and magnitude of the
   forecasts are quite similar for the US,
   Canada, and Alberta.




November 18, 2003                                                                    Housing: Page 1 of 4
                                                          Greater Edmonton
                                                       Economic Outlook – 2004


                                                           Housing Starts
                                          16                                                                   50
                                          14                                                                   45
                    Number of Starts in
                    Other Cities (000s)




                                                                                                                     Number of Starts in
                                                                                                               40
                                          12




                                                                                                                       Toronto (000s)
                                                                                                               35
                                          10                                                                   30
                                           8                                                                   25
                                           6                                                                   20
                                                                                                               15
                                           4
                                                                                                               10
                                           2                                                                   5
                                           0                                                                   0
                                               1998   1999   2000     2001   2002    2003f   2004f    2005f
                                                                         Year

                                               Vancouver     Ottawa     Calgary     Edmonton         Toronto




              Source: The Conference Board of Canada, Metro Outlook Autumn 2003 .




   Housing starts in Edmonton reached a                                           The differences in the two forecasts most
   peak in 2002 with 12,582 starts in 2002.                                       likely reflect differences in timing as to
                                                                                  when the forecasters expect the current
   The Conference Board of Canada is                                              superheated market to level off and return
   forecasting a slowdown in starts over the                                      to more normal levels of growth.
   forecast period to 8,900 in 2003, 7,000 in
   2004, and 6,500 in 2005.                                                       The housing market has been a strong
                                                                                  contributor to Edmonton’s economic
   By comparison, the City Forecast                                               growth. When it slows it will have a
   Committee is estimating total housing                                          downward impact on economic growth in
   starts of 12,100 in 2003, 11,300 in 2004                                       the region.
   and 10,100 in 2005.




November 18, 2003                                                                                                   Housing: Page 2 of 4
                                                                 Greater Edmonton
                                                              Economic Outlook – 2004



                                              Per Capita Investment in New
                                                         Housing
                                      1800
          Per Capita investment ($)




                                      1600
                                      1400
                                      1200
                                      1000
                                      800
                                      600
                                      400
                                      200
                                        0
                                             1993   1994   1995   1996   1997   1998   1999   2000   2001   2002
                                                                            Year

                                                    Ontario       Quebec        Alberta       BC     Canada
          Source: Statistics Canada




   This measures the total dollars invested in                                     Alberta’s investment in new housing has
   new housing in the specified jurisdiction,                                      greatly exceeded that for Canada for six
   divided by total population of the                                              years. The length of this housing surge in
   jurisdiction.                                                                   Alberta is behind the belief of some
                                                                                   analysts that housing starts in Alberta are
   From 1993 – 1997 BC had the largest per                                         due to decline. When this occurs economic
   capita investment in new housing. Since                                         growth will be negatively impacted.
   then Alberta has taken the lead.                                                However, other sectors, such as tourism,
                                                                                   should experience greater growth as
   Between 1993 and 2002, Alberta’s per                                            consumer dollars are redirected from
   capita investment in new housing                                                housing.
   increased by 53% while BC’s per capita
   investment in new housing decreased by
   66%.




November 18, 2003                                                                                             Housing: Page 3 of 4
                                                    Greater Edmonton
                                                 Economic Outlook – 2004


                                               Existing Housing Prices
                                                 1990 (01) 2003 (08) (Home and Land)

                                     240,000
                                                Edmonton
                                     210,000    Calgary
                    housing prices




                                                Poly. (Edmonton)
                                     180,000    Poly. (Calgary)

                                     150,000


                                     120,000


                                      90,000
                                           94




                                          99
                                           00




                                           03
                                          90

                                          91
                                          92

                                          93


                                          95
                                          96

                                          97

                                          98




                                          01

                                          02
                                        19

                                        19
                                        19

                                        19
                                        19

                                        19
                                        19

                                        19


                                        19
                                        20

                                        20


                                        20
                                        19




                                        20
                    Sources: Edmonton and Calgary Real Estate Boards




   Edmonton housing prices have been                                   Note trend lines. Edmonton is running
   increasing as a result of the strong housing                        well above the trend suggesting a “hotter”
   market. Nevertheless, it is still a very                            market than Calgary, which has not seen
   affordable city. This is good because as                            the prices sustained above trend growth.
   interest rates rise the cut back in housing
   could well be more muted than will be the
   case in Toronto, Vancouver or probably,
   Calgary.




November 18, 2003                                                                            Housing: Page 4 of 4
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 MIGRATION



                                  Net Migration Forecast

                               Edmonton's Projected Migration by Forecaster

                               Region                CBOC                ESEO
                            Edmonton
                                2003                 9,897               9,500
                                2004                 8,954               9,500
                                2005                 7,661               9,000




            Sources: institutions listed above




   Forecast migration to Edmonton continues                  With Edmonton currently experiencing
   to remain strong, averaging 9,085 over the                low unemployment and a high labour
   forecast period.                                          participation rate, strong net migration is
                                                             needed to sustain strong economic growth.




November 18, 2003                                                                   Migration: Page 1 of 5
                                                      Greater Edmonton
                                                   Economic Outlook – 2004


                            Alberta Inter-provincial Migration

                       140000

                       120000

                       100000

                        80000
             Persons




                        60000

                        40000

                        20000

                            0
                                 1994     1995    1996     1997        1998       1999   2000   2001   2002

                                                                  In   Out    Total




                       Source: Statistics Canada, CANSIM database




   Total inter-provincial migration in Alberta                                 Net migration reached a peak in 1998 at a
   has not changed a great deal over the past                                  total of 43,000 persons.
   5 years.

   In 1994 and 1995 fewer people entered the
   province than left; however, in 1996, this
   trend changed with more people entering
   than leaving.




November 18, 2003                                                                                      Migration: Page 2 of 5
                                                      Greater Edmonton
                                                   Economic Outlook – 2004


                              Total Migration Between Alberta
                                  and the Other Provinces
                      60000


                      50000


                      40000
            Persons




                      30000


                      20000


                      10000


                          0
                               1994    1995        1996   1997    1998        1999   2000        2001     2002

                                BC    SK      MB     ON   PQ     NB      NS     PE   NF     YK      NW      NV




             Source: Statistics Canada, CANSIM database




   Total migration between Alberta and BC                                During this period total migration between
   continues to be the highest followed by                               Alberta and the provinces has changed
   Ontario and Saskatchewan. This includes                               very little.
   both in-migrants and out-migrants.




November 18, 2003                                                                                       Migration: Page 3 of 5
                                                  Greater Edmonton
                                               Economic Outlook – 2004


                       Alberta Net Inter-provincial Migration

                       50000

                       40000

                       30000

                       20000
             Persons




                       10000

                           0
                                1994   1995    1996        1997        1998       1999      2000           2001     2002
                       -10000

                       -20000

                                              Total   BC          SK    MB       ON      East      North




            Source: Statistics Canada, CANSIM database



   In the chart above, East includes all                                      15,000 persons. This was the major reason
   provinces east of Ontario and North                                        for Alberta achieving strong in-migration.
   includes the Territories.
                                                                              As the BC economy improves – which it is
   In 1994 and 1995 more people were                                          expected to do – Alberta is likely to face a
   leaving Alberta than migrating to the                                      real challenge in maintaining high levels
   province; however, in 1996 as Alberta’s                                    of net in-migration. With an improving
   economy began to take off, an influx of                                    economy not only would there be less
   inter-provincial migrants came to Alberta.                                 reason for BC residents to seek
   Since 1995 Alberta has not seen a negative                                 employment in Alberta, the former
   net migration figure.                                                      residents of BC now living in Alberta may
                                                                              be inclined to return to BC.
   From 1994-1996 Alberta had net out-
   migration to BC; however, in 1998, BC                                      Net inter-provincial migration between
   became the number one provincial source                                    Alberta and Saskatchewan is on the rise.
   of net in-migrants to Alberta. In the space                                Between 1994 and 2002, 56% more people
   of only four years the situation changed                                   migrated to Alberta from Saskatchewan.
   from Alberta having a net outflow of                                       Saskatchewan follows BC as the second
   10,000 persons to BC to a net inflow of                                    largest source of net in-migration.


November 18, 2003                                                                                                 Migration: Page 4 of 5
                                                   Greater Edmonton
                                                Economic Outlook – 2004


                                           Sources of Migration:
                                                Edmonton
                                                                                   Intercity
                             10,000
                                                                                   Interprovicial
                              8,000                                                International
                              6,000
                              4,000
                       Persons




                              2,000
                                  0
                             -2,000
                             -4,000
                             -6,000
                             -8,000
                                      95   96     97    98     99     00    01     02   03f   04f   05f

                    Source: The Conference Board of Canada, Metro Outlook Autumn 2003




   The success of Edmonton’s economy has                               The largest source of migration to
   attracted immigrants from across Alberta,                           Edmonton is from other provinces,
   Canada and other parts of the world.                                especially BC. Upswings in those
   The influx of migrants helps keep the                               economies make it more difficult to attract
   housing market strong which also                                    migrants and can reverse the flow from
   contributes to the strength of the                                  Edmonton back to those provinces.
   Edmonton economy.
                                                                       Low housing costs in Edmonton relative to
   With low unemployment in Edmonton it is                             major cities in BC and Ontario is one of
   imperative that the high levels of in-                              Edmonton’s real strengths.
   migration continue. (Note: in-migration to
   Calgary is more than double that of
   Edmonton).




November 18, 2003                                                                                    Migration: Page 5 of 5
                                                                           Greater Edmonton
                                                                        Economic Outlook – 2004

 CORPORATE PROFITS



                                                         Corporate Profits Before Taxes
                                                                               Canada

                                             40

                                             35
             Profits (Billions of Dollars)




                                             30

                                             25

                                             20

                                             15

                                             10

                                              5

                                              0
                                                  1994    1995   1996   1997   1998   1999   2000   2001      2002    2003




            Source: Statistics Canada, CANSIM database




   Canada’s corporate profits before taxes                                              Low interest rates, decreased inventories
   increased substantially over the past 6                                              and an improving economy all help
   quarters, but were flat in the first half of                                         improve profit levels.
   2003.

   Strong profit levels are important as they
   drive business investment.




November 18, 2003                                                                                          Corporate Profits: Page 1 of 1
                                             Greater Edmonton
                                          Economic Outlook – 2004

 INVESTMENT


                                  Alberta Major Projects
                            90
                                                   $80.4 billion
                            80
                            70
                            60
                $Billions




                            50                                        Other
                            40
                                                                     Oil, gas,
                            30
                                                                     oilsands
                            20
                                 $18.3 billion
                            10
                             0
                                    Aug-96              Oct-03

            Source: Alberta Economic Development




   The big economic driver in Alberta is the             The oil, gas, and oilsands sector leads this
   investment in major capital projects.                 investment. It has also created a
                                                         favourable climate for other capital
                                                         investment.




November 18, 2003                                                             Investment: Page 1 of 4
                                                                Greater Edmonton
                                                             Economic Outlook – 2004



                                   Oilsands Capital Expenditures

                        12,000

                        10,000
            thousands




                         8,000

                         6,000

                         4,000
                         2,000

                            0
                                        1997



                                                      1999

                                                             2000

                                                                    2001

                                                                           2002




                                                                                                 2005



                                                                                                               2007

                                                                                                                      2008

                                                                                                                             2009

                                                                                                                                    2010
                                               1998
                                 1996




                                                                                   2003

                                                                                          2004



                                                                                                        2006




                                                                                                                                            2011

                                                                                                                                                   2012
                           Proposed & Committed                                   Probability Adjusted
                           Expenditures                                           Expenditures

            Source: Alberta Economic Development


   The dark bars show the value of Oilsands                                                                10% discount if the project has
   projects that have been completed, are                                                                  regulatory, but not yet commercial
   underway, or have been proposed.                                                                        approval
                                                                                                           30% discount if the project's
   It is unlikely that all of the proposed                                                                 regulatory approval has been filed
   projects will be completed, at least within                                                             75% discount if the project's
   the proposed timeframe. Manpower                                                                        regulatory approval process has not
   availability is one of the biggest obstacles.                                                           commenced with only a formal
                                                                                                           project announcement
   The light bars represent an AED estimate
   of the probable value of future oilsands                                                      Based on current announcements the
   projects. The Probability Adjustment is                                                       oilsands projects should contribute another
   based on the following discounts:                                                             ten years of economic activity to the
                                                                                                 Alberta economy, with average annual
         no discount if the project is                                                           investment in excess of $4 billion.
         completed, is under construction, or
         has commercial approval                                                                 There are risks to that economic activity,
                                                                                                 including rising production costs, Kyoto,
                                                                                                 and the availability of adequate water
                                                                                                 supplies.


November 18, 2003                                                                                                                          Investment: Page 2 of 4
                                                  Greater Edmonton
                                               Economic Outlook – 2004



                       Edmonton Commercial and Residential Development
                                                Building Permits Value(000’$)


                         100,000,000
                                                 Commercial
                             80,000,000          Residential

                             60,000,000
                      CDN$




                             40,000,000


                             20,000,000


                                     0
                                      2000        2001              2002        2003



                    Source: City of Edmonton




   Commercial investment has remained                          2003 has seen a real increase in multi-
   stable with a spike in one quarter of 2002.                 family construction, both condos and
   This is primarily shopping centers and                      rental units
   retailing space.

   Strong construction growth is being driven
   by residential construction.




November 18, 2003                                                                 Investment: Page 3 of 4
                                           Greater Edmonton
                                        Economic Outlook – 2004


                       Edmonton Industrial and Institutional Development
                                        Building Permits Value(000’$)


                    30,000,000
                                                                   Industrial
                                                                   Institutional
                    20,000,000
               CDN$




                    10,000,000




                             0
                              2000      2001               2002                 2003




             Source: City of Edmonton




   Industrial and institutional development is
   stable but well behind commercial and
   residential in total value.




November 18, 2003                                                                      Investment: Page 4 of 4
                                                    Greater Edmonton
                                                 Economic Outlook – 2004

 EXCHANGE RATES



                                Exchange Rate Forecast


                              Projected Exchange Rates by Region and Forecaster

                    Region        RBC            Scotia   BMO      TD        ESEO      CBOC
                    US/Can
                     2003         0.75            0.73    0.71     0.73      0.72       0.79
                     2004         0.78            0.79    0.75     0.76      0.74       0.69
                     2005                                 0.76               0.72




            Sources: institutions listed above




   The rise in the value of the Canadian                                  improved global       demand       for
   dollar in 2003 was unexpected.                                         commodities,
                                                                          weak U.S. growth.
   For several years forecasters had argued
   that the economic fundamentals were in                        With the exception of the Conference
   place to justify a rise in the value of the                   Board, every forecaster has projected the
   Canadian dollar against the U.S. dollar,                      Canadian dollar to rise through the
   but the reverse kept happening.                               forecast period.

   Forecasters attribute the rise in the
   Canadian dollar in 2003 to the following:

           the ballooning current account
           deficit and a massive current
           account deficit,



November 18, 2003                                                                   Exchange Rates: Page 1 of 2
                                                                                                    Greater Edmonton
                                                                                                 Economic Outlook – 2004


                                                                                   Canadian Exchange Rate
                                                                          $0.80
                    US Dollars Required to Purchase One Canadian Dollar




                                                                          $0.75                                                        highest value since      2003
                                                                                                                                          Janurary 1994



                                                                                                                                   17.9% appreciation
                                                                          $0.70                                                    between December
                                                                                                                                 2002 and October 2003




                                                                          $0.65



                                                                          $0.60



                                                                          $0.55



                                                                          $0.50
                                                                              Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03


            Source: Bank of Canada




   In October 2003 the Canadian dollar had a                                                                              The Canadian dollar appreciated 17.9%
   value of $0.76 US/CAN, which was the                                                                                   from its low of $0.64 US/CAN in
   highest value since January 1994.                                                                                      December 2002 to $0.76 US/CAN in
                                                                                                                          October 2003.




November 18, 2003                                                                                                                                            Exchange Rates: Page 2 of 2
                                                                                 Greater Edmonton
                                                                              Economic Outlook – 2004

 OIL AND GAS



                                                                Alberta’s Share of Canadian Oil
                                                                           Production
                                                          90%
             Alberta's Share of Canadian Oil Production




                                                          80%

                                                          70%

                                                          60%

                                                          50%

                                                          40%

                                                          30%

                                                          20%

                                                          10%

                                                          0%
                                                                1994   1995   1996   1997   1998   1999   2000   2001   2002




            Source: Statistics Canada, CANSIM database




   Alberta’s share of Canadian oil production
   has decreased from a high of 77% in 1994
   to a low of 64% in 2002.




November 18, 2003                                                                                                 Oil and Gas: Page 1 of 5
                                                                   Greater Edmonton
                                                                Economic Outlook – 2004



                                                   Alberta’s Changing Oil Mix
                                        45000                                                                                  90000

                                        40000                                                                                  80000




                                                                                                                                       Thousands of cubic metres
            Thousands of Cubic Metres




                                        35000                                                                                  70000

                                        30000                                                                                  60000




                                                                                                                                            (scale for bars)
                 (scale for lines)




                                        25000                                                                                  50000

                                        20000                                                                                  40000

                                        15000                                                                                  30000

                                        10000                                                                                  20000

                                         5000                                                                                  10000

                                            0                                                                                  0
                                                1994   1995    1996    1997        1998   1999      2000     2001       2002
                                                       Total    Light and Medium      Heavy      Synthetic    Bitumen




            Source: Statistics Canada, CANSIM database




   Alberta’s output of total oil production                                               Alberta is currently enjoying high drilling
   has remained relatively unchanged over                                                 activity as oil companies seek to improve
   the past 9 year; however, the changing oil                                             production from existing wells and
   mix has drastically changed from light and                                             discover new reserves of light and medium
   medium oil being dominant in 1994 to                                                   crude. If this drilling activity should fail to
   synthetic crude oil matching the                                                       find economically viable sources of light
   production of light and medium oil in                                                  and medium crude it should be expected
   2002.                                                                                  that drilling activity would decrease. This
                                                                                          possibility represents a downside risk to
   This pattern reinforces the changing nature                                            Greater Edmonton’s future rate of
   of the Alberta oil industry. If new reserves                                           economic growth.
   of light and medium crude are not found
   the contribution from this resource to
   Alberta’s economic environment will
   continue to decline.




November 18, 2003                                                                                                         Oil and Gas: Page 2 of 5
                                             Greater Edmonton
                                          Economic Outlook – 2004



                                                Oil Prices
                                          West Texas Intermediate

                       35

                       30
            US $/bbl




                       25

                       20

                       15

                       10
                            1995   1997            1999             2001          2003f         2005f




             Source: Canadian Petroleum Association and City Forecast Committee




   The high prices in 2003 have spurred                         Prices may not decline as projected if
   increased drilling activity which is very                    continued instability in Iraq reduces the
   positive for Edmonton.                                       amount of Iraqi oil that reaches world
                                                                markets. This would increase expected
   Prices are expected to gradually decline                     economic growth in Greater Edmonton.
   reflecting the elimination of the premium
   paid in 2003 as a result of the Iraq war and
   expected increases in production.




November 18, 2003                                                                     Oil and Gas: Page 3 of 5
                                                         Greater Edmonton
                                                      Economic Outlook – 2004



                                                 Alberta Natural Gas
                                        Production and Share of Total Canadian Production

                                46.0%                                                                      140000


                                45.5%                                                                      135000


                                45.0%                                                                      130000


                                44.5%                                                                      125000




                                                                                                                    axis for line
                axis for bars




                                44.0%                                                                      120000


                                43.5%                                                                      115000


                                43.0%                                                                      110000


                                42.5%                                                                      105000


                                42.0%                                                                      100000
                                        1994   1995   1996   1997     1998   1999     2000   2001   2002
                                                              Share      Production

            Source: Statistics Canada, CANSIM database




   Alberta’s share of Canadian production of                                    As with the trend for light and medium
   Natural gas remained relatively consistent                                   crude petroleum, if additional reserves of
   between 1994 and 1999. In 2000 it began                                      natural gas are not discovered the
   to decrease. This is both a result of other                                  contribution of natural gas production to
   provinces increasing their production of                                     Alberta’s economy will continue to
   natural gas, and Alberta production                                          decline. This will also have a negative
   declining.                                                                   impact on the output from the oil and gas
                                                                                servicing industry, and represents a
                                                                                downside risk to Greater Edmonton’s
                                                                                economic growth.




November 18, 2003                                                                                          Oil and Gas: Page 4 of 5
                                               Greater Edmonton
                                            Economic Outlook – 2004



                                     Alberta Natural Gas Prices
                                                           CDN $/GJ

                        7.0
                                      Alberta Average Market Prices
                        6.0
                                      AECO 30 Day Spot Prices
                        5.0

                        4.0
                        3.0

                        2.0

                        1.0

                        0.0
                              1995         1997          1999           2001         2003f       2005f




                Source: Canadian Petroleum Association and City Forecast Committee




   High gas prices have both positive and                             On the negative side, it greatly increases
   negative impacts on the Edmonton                                   heat and electricity costs for Edmonton
   economy.                                                           business, eroding our cost advantage.

   On a positive side it has spurred increased                        Gas prices are now expected to remain at
   drilling activity and provides funding for                         these higher levels because of a shortage
   greater provincial government investment                           of future supply. Proven reserves are
   in programs and infrastructure.                                    declining. New reserves will be more
                                                                      expensive to find and develop. Higher gas
                                                                      prices will be required to make the new
                                                                      reserves economically viable to develop.




November 18, 2003                                                                            Oil and Gas: Page 5 of 5
                                                         Greater Edmonton
                                                      Economic Outlook – 2004

 TOURISM

                                             Canada: Total Person-Visits
                                       120
                                                                                      4.3%
                                       119

                                       118

                                       117
              Millions Person-Visits




                                       116

                                       115
                                                              -1.2%
                                       114

                                       113

                                       112

                                       111
                                               2002          2003f                    2004f

            Source: Statistics Canada - CITIES Project; Conference Board of Canada


   Total person-visits in 2003 are expected to                               expected strong economic growth
   decrease by 1.2% in 2003 and then                                         in both Canada and the U.S. in the
   increase by 2.4% in 2004. Tourism                                         last half of 2003 and through 2004;
   spending in 2003 is expected to decrease                                  slowing of new housing starts –
   1.4% from 2002 expenditures of $51.8                                      when housing starts are strong
   billion. $51.7 billion was spent on tourism                               there is less discretionary income
   in 2001.                                                                  to spend on travel;
                                                                             the growth in travel demand in
   2003 was originally expected to be a                                      2000, 2001 and 2002 has lagged
   rebound year but the Iraq War, SARS,                                      economic growth whereas the two
   airline restructuring, BSE, and the forest                                indicators normally move together
   fires collectively wiped out the expected                                 – a market correction is overdue;
   growth. Given the impact of those events                                  surveys      reveal    that   travel
   the results for 2003 are actually quite                                   motivations remain strong.
   encouraging.                                                              The risk to this rebound is
                                                                             unexpected events.
   The reasons for the optimism in 2004
   include the following:

November 18, 2003                                                                             Tourism: Page 1 of 4
                                                         Greater Edmonton
                                                      Economic Outlook – 2004


                                           Canada: Person-Visits by Region
                                     120

                                                                                           4.0
                                     100                    -0.3
            Millions Person-Visits




                                     80


                                     60


                                     40


                                     20                             -5.4                          5.4
                                                                             -7.8                        7.7
                                      0
                                               2002                2003f                         2004f
                                                        Domestic   U.S.    International




            Source: Statistics Canada - CITIES Project; Conference Board of Canada



   In the domestic market expect pleasure                                  Canada will face significant international
   travel to lead the rebound in 2004.                                     competition for those U.S. originating
   Business travel is expected to be slower to                             tourists.
   recover as business looks for a period of
   strong profits before loosening travel                                  Overseas travel to Canada is projected to
   restrictions.                                                           increase by 7.7%, 6.6% to Alberta. This
                                                                           will still leave overseas travel well below
   In 2004 overnight domestic pleasure travel                              the peak levels experienced in 2000.
   to or within Alberta is projected to
   increase by 4.6%, overnight domestic                                    The top four overseas markets are
   business trips by 3.4%.                                                 projected to increase by the following
   From the U.S. overnight travel to Canada                                amounts in 2004: U.K – 5.5%, Germany –
   is projected to increase 5.4%, 4% to                                    6.9%, France – 6.5%, and Japan – 8.5%.
   Alberta.                                                                The smaller Asian markets – South Korea,
                                                                           Taiwan, Hong Kong, China – are all
   Air travel from the U.S. to Canada is                                   expected to grow by 10% or more in 2004.
   forecast to increase by 8.5% reflecting the
   pent-up demand on the part of Americans
   to travel longer distances on their holidays.


November 18, 2003                                                                                         Tourism: Page 2 of 4
                                                       Greater Edmonton
                                                    Economic Outlook – 2004


                                           Edmonton:Total Person-Visits

                                     3.5                                             4.6%
                                                             0.2%

                                      3

                                     2.5
            Millions Person-Visits




                                      2

                                     1.5

                                      1

                                     0.5

                                      0
                                             2002            2003f                   2004f




            Source: Statistics Canada - CITIES Project; Conference Board of Canada




   The preliminary Conference Board                                  The projected growth for Edmonton is
   projection for Edmonton in 2003 is for a                          very similar to that for Canada.
   very small increase of 0.2% followed by
   an increase of 4.6% in 2004, reaching 3.3
   million person-trips.




November 18, 2003                                                                            Tourism: Page 3 of 4
                                                          Greater Edmonton
                                                       Economic Outlook – 2004


                                           Edmonton:Person-Visits By Origin
                                          3
                                                                                           4.5%
                                                            0.9%

                                         2.5
              Person-Visits (Millions)




                                          2



                                         1.5



                                          1



                                         0.5
                                                                   -1.9%                          4.2%
                                                                           -7.7%                          6.1%
                                          0
                                                2002               2003f                          2004f
                                                        Domestic   U.S.    International
            Source: Statistics Canada - CITIES Project; Conference Board of Canada




   Edmonton’s domestic tourism market is                                   In the international market the recovery in
   forecast by the Conference Board to show                                2004 is expected to bring person-visits
   a modest increase in 2003 (0.9%) followed                               back to 140,000. This will still be less than
   by solid growth in 2004 (4.5%). As the                                  the 143,000 person-visits in 2002.
   biggest domestic tourism market for
   Edmonton is from within Alberta, the
   expected growth in 2004 is really a
   reflection of the expected economic
   growth in Alberta in 2004.

   Both the U.S. and International tourism
   markets are expected to decline in 2003
   and recover in 2004. In 2004 the U.S.
   market is expected to be 325,000 person-
   visits, an increase over the 318,000 in
   2002.




November 18, 2003                                                                                            Tourism: Page 4 of 4
                                     Greater Edmonton
                                  Economic Outlook – 2004

 BIBLIOGRAPHY
   1. City of Edmonton                          6. BMO Financial Group
      a. Edmonton Socio-Economic                    a. Outlook 2004 – October 2003
         Outlook (ESEO) – October 2003                 http://www.bmo.com/economic/ou
   2. Statistics Canada                                tlook2004e.pdf
      a. Labour Force Survey                        b. Regional Outlook – October 2003
      b. Trends in Provincial and Territorial          http://www.bmo.com/economic/re
         Economic Statistics: 1981-2002                gular/regional102003.pdf
         http://www.statcan.ca/english/freep    7. TD Economics
         ub/13-605-                                 a. Global Economic Outlook –
         XIE/2003001/pdf/2003provincial.p              October 2003
         df                                            http://www.td.com/economics/qef/
      c. CANSIM database                               geo1003.pdf
   3. The Conference Board of Canada                b. Provincial Economic Outlook –
      (CBoC)                                           July 2003
      a. Metropolitan Outlook – Autumn                 http://www.td.com/economics/prov
         2003                                          /prov0703.pdf
      b. Tourism Outlook Over Coffee            8. Alberta Economic Development
         2004                                       (AED)
   4. RBC Financial Group                              a. Major Alberta Projects –
      a. Economic and Financial Market                     October 2003
         Outlook – Autumn 2003                         b. Oil Sands Industry Update –
         http://www.rbc.com/economics/ma                   October 2003
         rket/pdf/fcst.pdf                                 http://www.alberta-
      b. Provincial Outlook – Autumn 2003                  canada.com/oandg/pdf/oilsands
         http://www.rbc.com/economics/ma                   _oct2003.pdf
         rket/pdf/provfcst.pdf                         c. Global Economic Outlook –
   5. Scotiabank Group                                     June 2003
      a. Global Outlook – September 2003                   http://www.alberta-
         http://www.scotiacapital.com/Engli                canada.com/statpub/pdf/globalj
         sh/bns_econ/bnsglobe.pdf                          une03.pdf
      b. Forecast Update – November 2003               d. Alberta Business Outlook –
         http://www.scotiacapital.com/Engli                August 2002
         sh/bns_econ/forecast.pdf                          http://www.alberta-
      c. Provincial Forecast Update –                      canada.com/statpub/pdf/news_
         September 200                                     busoutaug02.pdf
      d. http://www.scotiacapital.com/Engli     9. Bank of Canada
         sh/bns_econ/pupdate.pdf                10. Edmonton Real Estate Board
                                                11. Calgary Real Estate Board
                                                12. Canadian Petroleum Association



November 18, 2003                                         Bibliography: Page 1 of 1
                                   Greater Edmonton
                                Economic Outlook – 2004

 CONTACT INFORMATION

Myron Borys                            Terry Dew
Vice President, Economic Development   Director, Knowledge Management
Economic Development Edmonton          Economic Development Edmonton
9797 Jasper Avenue, NW                 9797 Jasper Avenue, NW
Edmonton, Alberta T5J 1N9              Edmonton, Alberta T5J 1N9
Tel: (780) 401-7689                    Tel: (780) 917-7638
Fax: (780) 426-0535                    Fax: (780) 426-0535
Email: MBorys@ede.org                  Email: Tdew@ede.org




November 18, 2003                                  Contact Information: Page 1 of 1

								
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