VANCOUVER, BC — After another year of stellar growth in 2017, B.C.’s economy will maintain positive momentum through 2020, despite drag from the housing sector, says a new forecast by Central 1 Credit Union (Central 1).
Real GDP growth is forecast to reach three per cent this year on the heels of estimated gain of more than four per cent in 2017. Growth slows to 2.3 per cent in 2019 before accelerating to 3.3 per cent in 2020. This will mark more than a decade of uninterrupted annual growth.
“B.C.’s economy remains in a strong position with consumer demand underpinned by high employment and income growth, rising exports and government spending,” says Bryan Yu, deputy chief economist at Central 1. “Additionally, non-residential investment spending is forecast to surge by the end of the decade as major private and public works projects get underway and new and existing firms continue to invest in operations.”
Housing is forecast to be a drag on growth over the forecast period, reflecting a combination of federal lending restrictions, provincial government policy measures, and elevated construction activity. A housing price correction is not forecast. Government investment will partially offset less market activity, holding housing starts steady around 40,000 units.
“Employers will face increasing challenges in finding workers to support operations as employment is constrained by growth in the labour force due to an aging population,” Yu says. The average unemployment rate trends toward four per cent by the end of the decade contributing to faster wage growth.
“While growth prospects are strong, downside risks include trade disruptions from NAFTA or a broader trade war between the U.S and other countries,” added Yu. “Geographic diversification of B.C. exports limits some of the NAFTA risk.”
- Personal income growth exceeds six per cent this year on a combination of employment and wage growth, before decelerating to five per cent in 2018.
- Annual employment growth reaches 2.2 per cent in 2018 from a 3.7 per cent gain in 2017. Growth decelerates to 1.4 per cent and 1.6 per cent in 2019 and 2020, constrained by labour force expansion.
- Housing starts remain steady over the forecast period, averaging a pace of near 40,000 units. However, the contribution of residential investment-to-growth is negative through 2019.
- Global economic growth continues to improve supporting export growth. The Canadian dollar is forecast to hold range-bound over the forecast period, averaging near 80 US cents.
- Forestry sector is an ongoing drag to economy, reflecting combinations of the softwood trade dispute and fibre availability due to the long-term impacts of the mountain pine beetle epidemic. Mining sector activity expands, but remains low.
- Service sector expansion continues to expand faster than goods production due strong consumer demand and growth in service exports, which continues to underpin higher retail and wholesale trade expansion, transportation and warehousing, and professional service sector growth.
Read the full report: B.C. Economic Outlook 2018-2020
About Central 1
With offices in Vancouver, Mississauga and Toronto, Central 1 holds on balance sheet approximately $18.1 billion in assets. It provides wholesale financial products, trust services, payment processing solutions and direct banking services to about 300 credit unions and institutional clients from coast to coast.
In addition, Central 1 is the primary liquidity manager, payments provider and trade association for its 42 member credit unions in B.C. and 67 Ontario member credit unions. Its members represent a consumer-oriented, full-service retail financial network that collectively serves 3.4 million members and holds more than $126.8 billion in assets. For more information, visit www.central1.com.
Deputy Chief Economist
Central 1 Credit Union
T 604.742.5346 or 1.800.661.6813 ext. 5346
Member & External Communications
Central 1 Credit Union
T 604.734.2511 or 1.800.661.6813