ISER Professor Mouhcine Guettabi forecasts modest economic growth for the Alaska economy for 2021 and 2022. However, he expects that this modest growth will not be enough for Alaska to fully recover from the COVID-19 pandemic shock. Professor Guettabi projects that the economy in 2022 will still be 5% below the pre-pandemic level. The forecast appears in a report entitled Alaska’s Economy and the pandemic, which was prepared for the Alaska Department of Commerce, Community and Economic Development (DCCED.) The projection that Alaska’s economy will not fully recover by 2022 is consistent with similar Federal Reserve forecasts for the US economy.
Any forecast of the economy is inextricably tied to assumptions and expectations about how the pandemic evolves and how governments respond to the pandemic. In developing his forecast, Professor Guettabi assumed that the external economic tailwinds associated with the pandemic will largely subside. Specifically, he assumed oil prices will be stable at approximately the current level, that the federal government will continue to provide support to unemployed individuals, and that travel will return to normal in 2021. Professor Guettabi’s forecast (and the national forecasts) make clear that the pandemic has created a very substantial economic drag on the economy that will take several years to overcome.
There is significant risk that the direct negative consequences of the COVID-19 will last longer than Dr. Guettabi assumed for his projections. There are, therefore, serious risks that the economy will perform more poorly than Dr. Guettabi has forecast.
You can also see a recent video in which Professor Guettabi is featured alongside Neal Fried and Marcus Hartley (embedded above).