Vancouver, B.C., February 10, 2020 –
British Columbia’s economy is forecast to grow by 2.8 per cent this year, broadly outpacing the other Canadian provinces, before easing back to 2 per cent in 2021, according to Central 1’s deputy chief economist Bryan Yu.
In his latest British Columbia (B.C.) Regional Economic Report, Yu outlines the trends we can expect across each region of the province this year and in 2021.
“B.C.’s economic growth will be driven by investment in the burgeoning technology sector in Vancouver and the surrounding Southwest quadrant. It will also benefit from major infrastructure projects, including LNG Canada’s $40 billion natural gas liquefaction plant in Kitimat and the associated Coastal Gaslink Pipeline in the North Coast region and public-sector investments such as the Site C Dam in Fort St. John,” said Yu. “Interior B.C. markets will face more challenging economic circumstances due to the combination of forestry sector job losses, challenging coal and energy markets and still subdued investment in mining,” he added.
B.C.’s population growth will remain elevated due to high federal immigration targets and demand for skilled workers, which will support consumer and housing demand, while helping to meet labour market needs. An increased ageing demographic is driving demand for services and increasing home sales, particularly on Vancouver Island and in the Thompson-Okanagan region, according to the report.
Yu draws attention to the forestry crisis which is hitting communities right across B.C. and a weakened coal mining sector, commenting: “Mills have closed and production has been curtailed across the province as a result of poor market conditions, a lack of long-term timber availability due to the mountain pine beetle epidemic of the 1990s and high input costs. Coal mining conditions have also weakened due to uncertainty in global economic conditions, hitting the Northeast and Kootenay the hardest.”
He adds: “The North Coast of B.C. will experience a boom in economic conditions tied to construction of LNG Canada’s natural gas liquefaction plant. However, much of this will be concentrated in the Kitimat-Terrace corridor. The local labour market is not able to meet labour demand, even with increased training for the local population. Much of the labour will come from other parts of B.C. such as the Cariboo and Thompson-Okanagan, although the region will benefit from local area spending. The Nechako will evolve more like the rest of the interior given significant forestry exposure.”
- The region will remain the strongest performer in B.C. as it continues to benefit from strong population growth and a growing technology sector (Amazon, Mastercard and Microsoft are notable recent investments).
- A building boom will support the labour market and rising housing market momentum is forecast to continue as the market rebounds.
- The economic outlook remains positive as this region benefits from a burgeoning technology sector and demand for services related to an aging and growing population.
- Housing market conditions remain firm and sales-to-active listing ratios point to sellers’ markets conditions.
- The combination of in-migration, a tight labour market and low inventory will support rising home values. Home sales are on the rise, specifically in the central and north Island, reflecting demand from retiree and lifestyle buyers.
- The forestry crisis is impacting the region.
- Regional economic growth is being driven by population growth and Kelowna remains a favoured destination.
- Employment figures reflect people from the region working on large-scale infrastructure projects in northern B.C.
- The local economy is supported by major infrastructure projects, including the $312 million Penticton Hospital Redevelopment, the $70 million Kelowna international airport and renovations to the B.C. Lottery Corporation head office in Kamloops.
- The wine sector will remain a source of growth due to long-term demand from Asian markets, despite a recent slowdown resulting from wildfires and geo-political tensions between Canada and China.
- The sharp and swift downturn in global coal prices in late-2019 is affecting the region.
- Housing and population growth will be hit by a weaker Alberta economy.
- There are high expectations that cannabis will be a source of potential economic growth with transition of the region’s gray (underground) cannabis economy to a legal industry.
- Sawmill production declined by 20 per cent in 2019, hitting communities in the Cariboo hard.
- Incomes from local workers stationed at the Site C Dam and LNG Canada’s liquefaction plant and the Coastal Gaslink pipeline in the North Coast and Northeast are flowing back to Cariboo, providing some offset to the forestry downturn and continuing to support the labour market.
North Coast and Nechako
- Business is booming due to construction on the LNG Canada natural gas liquefaction plant and the associated Coastal Gaslink Pipeline.
- Forestry and mining are weak but could potentially be offset by a surge in hiring associated with LNG, although up-skilling would be required.
- Strong port activity is evident with a double-digit growth in container volumes and tonnage up 12 per cent through the year despite disruptions from the CN rail work stoppage. Further gains can be expected as the Fairview Terminal expands capacity, creating interim construction jobs and long-term income.
- Economic conditions were soft in 2019 as subdued commodity market investment, weakening forestry and flat employment weighed on labour and housing markets.
- Weakened forestry and oil and gas sectors will continue to hamper growth in 2020 before prospects improve.
- The Site C Dam buildout is bringing economic benefits to the region.
- The coal market is weak but the U.S. – China Phase 1 trade deal will support global market conditions for steel which should stabilize the coal outlook.
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