BC economic growth leader

B.C. will lead provincial economic growth in 2018

Wednesday, November 29, 2017

While Alberta’s economy is set to lead the country this year, with robust economic growth of 6.7 per cent, British Columbia will once again take over in 2018 as the provincial growth leader, according to The Conference Board of Canada’s Provincial Outlook: Autumn 2017.

“Thanks to rising oil production and a swift turnaround in drilling levels, Alberta surged out of recession this year. But, the rebound has been unsustainably fast, implying the pace of recovery will moderate in 2018,” said Marie-Christine Bernard, director, provincial forecast, The Conference Board of Canada. “Next year, with strength in many sectors, British Columbia’s economy is poised to outpace all other provinces and will be one of only three provinces with growth above 2 per cent.”

Several sectors in Alberta came out of recession in 2017, but it was the swift pickup in drilling and solid oil production that led economic growth. The domestic economy also performed well, as consumer demand picked up, boosting retail sales and housing construction. But the booming growth is not expected to last, with Alberta’s economy forecast to grow at a more sustainable 2.1 per cent in 2018. However, recent strength in oil prices could help maintain the momentum in drilling and push economic growth higher over the near term.

The report notes that British Columbia is forecast to enjoy real GDP growth of 3.2 per cent this year. And, while slightly weaker growth of 2.7 per cent is anticipated for 2018, B.C. will still outpace all other provinces in economic growth.

One of the factors behind the slowdown next year is the cooling off in the housing sector. Measures implemented to cool demand and continued challenges related to housing affordability have led to a small decline in housing starts this year and they are forecast to remain virtually flat next year.

The cooling off in the housing sector will trickle down through the economy and lead to slower growth in employment, income, and, most significant of all, consumer spending. Meanwhile, the province’s forestry sector is expected to be either flat or negative over the next five years due to ongoing problems with the mountain pine beetle infestations and duties imposed by the U.S. on Canadian softwood lumber imports.

 

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