Alberta Lifts 2025 GDP Forecast, Cuts Borrowing Needs in Mid-Year Update, National Bank Says

06:52 AM EST, 11/28/2025 (MT Newswires) -- Alberta presented its 2025 Budget Update, and while it concedes that momentum is slowing, real gross domestic product in the province is now expected to rise by 2.1% this year, which is an improvement from Q1 and Budget expectations, said National Bank of Canada.

The 2026 growth is seen moderating further to 1.8%, the bank noted in a Thursday release.

Back in August's Q1 update, an initial downgrade to the oil price outlook meant less revenue at the margin and a larger-than-planned shortfall. With Thursday's mid-year update, the average WTI price has been marked down further.

All things considered, the net change to the province's fiscal bottom line is quite muted here, relative to the last official forecast in August, stated National Bank. If anything, the $6.44 billion deficit now projected for 2025-26 is a snick better than the $6.48 billion shortfall identified in Q1.

There's still a net deterioration relative to February's budget -- owing to reduced non-renewable resource royalties (NRR) -- but at 1.3% of GDP, Alberta's deficit still is lower than the weighted provincial average.

After paying down debt in each of the prior four fiscal years, roughly $7.7 billion is to be added to Alberta's net debt in 2025-26, pointed out the bank. Broadly consistent with the larger-than-planned deficit, the outright level of net debt at the end of 2025-26 has been set $1.2 billion higher than in budget.

Nonetheless, net financial liabilities are now tracking lower than the more recent Q1 update. Alberta remains relatively well-endowed financially speaking, with sustained growth in the Heritage Fund a strategic priority.

At 8.7% of GDP, Alberta's net debt burden is comfortably the lowest in the provincial sector, where the weighted average debt burden is more like 30% of GDP. Not surprisingly, interest costs are relatively limited, as per the latest update, while consolidated debt servicing costs consume barely 4% of the province's revenue dollar, added National Bank. The "interest bite" should remain very manageable going forward.

Also noteworthy, the mid-year update signals a smaller direct borrowing requirement than last time out, or $7.7 billion in Q2 versus $9.1 billion in Q1. Alberta, like its large provincial peers, benefits from exceptional access to debt capital markets.

The name has been well received by domestic and international investors alike, with international markets having so far accounted for a majority of fiscal year-to-date borrowing, according to National Bank.

All told, the province's borrowing requirement remains relatively low by provincial standards, with the funding program comfortably positioned for this point in the fiscal year.

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