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B.C. economy faces the ripple effect of the housing downturn

B.C. Economic Outlook 2019 – 2021

The report provides a deep dive into current economic trends, the macro economic environment, population growth and employment.

BRITISH COLUMBIA, March 14, 2019 – B.C.’s economy will face weak economic growth for the next three years due to the ripple effect of the housing market downturn, according to the latest Central 1 Credit Union (Central 1) forecast.

Central 1 Deputy Chief Economist, Bryan Yu, said that economic growth is being held hostage by the housing market slump, which is deeper than previously forecast.

Real GDP (Gross Domestic Product) is forecast to grow at 2.2 per cent this year before rising to 2.4 per cent in 2020 and 2.8 per cent in 2021—a marked slowdown from average growth of more than three per cent from 2014 to 2017.

“The ripple effect first hits housing starts and residential investment; though continues to drag on household spending.”

“Retail sales rose just two per cent in 2018 compared to 9.3 per cent in 2017, despite support from rising wages and a solid labour market and growth will remain modest going forward,” said Yu.

Fortunately, spending on major projects—including the construction of the Liquified Natural Gas plant, the replacement of the Pattullo Bridge and hospital redevelopments—are forecast to surge and keep the economy recession-free.

“Major projects will provide significant support to the economy over the next few years and absorb job losses that may result from the housing slowdown,” said Yu.

The low unemployment rate will also support job seekers who are looking for work.

“Employers will be challenged to find suitable employees, given the already low employment rate is predicted to drop from 4.7 per cent in 2019 to 4.4 per cent in 2020 to a near-record low of 4.0 per cent in 2021,” said Yu.

Wages are anticipated to climb by more than 3.5 per cent annually.

Highlights from the report:

  • Trade balance to widen as export growth slows to about 2.6 per cent in 2020 and 2021 as global growth slows demand, and imports rise with surge in capital investment demand
  • Government spending growth holds steady at 1.5 per cent
  • Employment growth slows from 1.9 per cent in 2019 to average of 1.6 per cent in 2020 and 2021 on labour availability.
  • Population growth to average 1.3 per cent annually (67,000 persons per annum) through 2021 on elevated international in-migration and rising interprovincial migration

Read the full B.C. Economic Outlook report that provides a deep dive into current economic trends, the macro economic environment, population growth and employment.

About Central 1

Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $19.2 billion in assets, we leverage our scale, strength and expertise to power progress for more than 250 credit unions and other financial institutions, enhancing the financial well-being of more than five million Canadians.

Contacts

Sarah Roberts
Communications Specialist, Central 1 Credit Union
T 604.714.6722 E communications@central1.com

Bryan Yu
Deputy Chief Economist, Central 1 Credit Union
T 604.742.5346 E byu@central1.com