Vancouver, B.C., February 25, 2021 –
- B.C.’s economy forecast to grow by 4.2 per cent in 2021 and by 4.5 per cent in 2022 before slowing to below three per cent in 2023;
- Stronger export and investment recovery and ongoing growth in knowledge sectors as global economic backdrop improves amid vaccine deployment;
- Housing demand anticipated to remain robust, lifting residential investment;
- Hospitality and other face-to-face services unlikely to fully recover during outlook period;
- B.C. has regained 89 per cent of jobs lost during the initial stages of the pandemic but tourism related employment remains sharply below pre-pandemic levels;
- Consumer consumption expected to climb 4.7 per cent this year, trending towards three per cent by 2023;
- Coal and gas expected to expand further with stronger global demand while elevated commodity prices will induce higher levels of production.
B.C.’s economy is expected to grow by 4.2 per cent in 2021 with its unemployment rate remaining elevated at an average of 7 per cent. The ongoing social and economic COVID-19 restrictions will continue to constrain economic activity into 2022, but B.C. is expected to see a further 4.5 per cent GDP growth in 2022 before slowing to below three per cent in 2023.
“Like economies around the globe, B.C.’s economy continues to recover from the sharp pandemic-driven downturn in 2020,” according to Central 1 Chief Economist, Bryan Yu in his latest B.C. Economic Outlook 2021-2023.
B.C.’s economic growth will be supported by higher consumer spending on goods, with overall consumer consumption expected to climb 4.7 per cent this year and trend towards three per cent by 2023. Rising goods exports will boost growth, according to Yu, who states: “Positive export and manufacturing trends continue, reflecting the strengthening global growth profile and stronger commodity price conditions.”
Higher sales of food and lumber improved trends towards the end of 2020. Going forward, coal and natural gas is expected to expand further due to stronger global demand and elevated commodity prices inducing higher levels of production.
“Improved business conditions, rising exports and stronger commodity prices will drive a strong rebound in non-residential investment as firms begin to spend after holding back during the early stages of the pandemic,” said Yu, adding: “For example, growth of more than 10 per cent is expected for machinery and equipment and building investment this year.”
The vaccine rollout and ongoing government support will also boost growth, said Yu.
Ongoing restrictions will delay rebounds in service industries tied to hospitality, accommodations, and other private services, the report states. Labour markets are expected to mend alongside the economy. “Robust hiring growth is expected, while the unemployment rate remains elevated this year at seven per cent before trending toward five per cent by 2023,” Yu commented.
The record high housing sales are set to continue to grow by 20 per cent this year, fuelled by low borrowing costs and remote-working households moving to suburban and smaller urban markets. “Average prices are forecast to rise 10 per cent this year with a moderating growth trend thereafter,” Yu observed.
Residential investment climbs two per cent this year followed by accelerating gains of four and six per cent thereafter, according to Yu, who attributes this to an expected increase in new housing starts (although starts will hold below 40,000 annual units until 2023).
“An improved labour market since the spring provides a solid launchpad for employment growth this year,” said Yu, adding: “Average employment is forecast to rise 4.7 per cent, with growth sliding to 3.2 per cent in 2022.” Most sectors will see employment returning to pre-pandemic levels this year, with the exception of tourism, accommodations, foodservices, arts, entertainment and recreation.
While B.C.’s January’s unemployment rate stood at 8 per cent, levels are forecast to average near seven per cent this year, moving to an average of five per cent by 2023. The downward pressure is a result of weak population growth over the coming year contributing to weaker labour force growth.
Yu concluded that this outlook is dependant on the success of the vaccine deployment across Canada and the potential spread of mutated COVID-19 variants.
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Meadhbh Monahan (pronounced ‘Maeve’)