B.C.'s economy will weather the continued decline in the province's forestry sector with strong consumer spending and construction activity, according to a BMO Financial Group provincial economics report.
The forestry sector, which is being hammered by U.S. housing market turmoil, will continue to be hit with production and staffing drops and will be a major drag on growth in the province.
However, construction ahead of the 2010 Winter Olympics will offset the weakness in the forestry sector. The report said that a tight labour market and record unemployment will keep B.C. consumer's spending.
B.C.'s economic growth is expected to fall to 2.5% in 2008, which would be down from a brisk 3.1% in 2007.
However, B.C.'s economic growth will remain higher than the national average of 1.5%, which is being affected by the downward spiral of growth in Ontario and Quebec from job losses and declines in central Canada's manufacturing sector.
According to the report, Western Canada will generate most of the country's growth, with Alberta benefiting from high oil prices, Saskatchewan enjoying booming potash production and Manitoba growing from a strong construction sector.