New B.C. Economic Outlook Report 2018 – 2021
VANCOUVER, August 22, 2018 – After a stellar run over the past four years in which the economy expanded by more than 3.5 per cent annually, British Columbia’s growth will slow over the next four years but still maintain moderate growth, according to the latest Central 1 Credit Union (Central 1) forecast.
Central 1’s B.C. Economic Outlook Report 2018 – 2021 looks at residential investment, employment, economic and population growth, as well as exports.
“Not surprisingly, the recent tightening of mortgage lending policy and provincial housing measures has slowed demand, which will feed into a lower pace of housing starts and residential investment in 2019 onwards and dampen growth,” said Deputy Chief Economist Bryan Yu.
Employment growth is forecast to decelerate over the period, but reflects the intensifying labour shortage. While rising wages support household demand, overall consumers spending growth slows from the pace observed in recent years. B.C.’s average unemployment rate is expected to remain near five per cent.
Economic growth is moving away from household-led demand, with investment activity expected to strengthen. Strong economic growth in recent years, labour and general capacity constraints are inducing organizations to invest in operations and expand, promoting business formation. Major project construction also lifts economic growth.
“Exports will continue to rise at a steady pace due to growth in the broader economy, with service-exports growing at a faster pace,” says Yu. “That said, the export environment faces significant uncertainty given an increase in protectionist sentiment from south of the border.”
Overall, B.C. economic growth will average above 2.5 per cent annually over the forecast period with both domestic drivers and export gains contributing to the positive performance.
Highlights from the report:
- After reaching 3.9 per cent in 2017, growth is forecast to ease to 2.9 per cent this year and average 2.7 per cent in 2019 to 2020, before slipping to 2.3 per cent in 2021.
- Home sales plunge on policy measures, but construction growth to remain positive this year.
- Labour shortages will hold back employment growth but tight labour market keeps wage growth above three per cent per year.
- B.C. continues to experience healthy population growth, trending at about 1.3 per cent year-over-year.
- Expansion of trade tariffs on Canada and more broadly would slow global trade, economic growth and commodity prices. While impacts will be negligible for 2018, trade disruption is a risk for export and investment activity in 2019 onwards.
- Liquefied natural gas investment is an upside risk for B.C.’s economy, but depends on a positive final investment decision from major project proponents.
Read the full report: B.C. Economic Outlook 2018-2021
About Central 1
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Member & External Communications Manager
Central 1 Credit Union
T 604.737.6814 or 1.800.661.6813 ext. 6814
Deputy Chief Economist
Central 1 Credit Union
T 604.742.5346 or 1.800.661.6813 ext. 5346