B.C. will grow 2.6% in 2011 and 2.2% in 2012, according to forecasts released this morning in BMO Capital Markets Economics’ Provincial Monitor report.
The report forecasts even slower growth for the country: 2.2% in 2011 and 1.8% in 2012.
BMO Capital Markets economist Robert Kavcic said BMO has reduced its growth forecasts for B.C. since summer, to factor in recent market volatility.
“[Before summer] we were looking at about the high 2’s to 3 % [growth] for B.C. for 2011 and 2012,” he said.
Kavcic said that across Canada, softening export markets – particularly the U.S.– as well as a slowing housing market and cooling consumer spending have reduced the pace of economic growth from 2010 levels.
As to why B.C. is forecast to grow at a faster pace than the Canadian average, Kavcic pointed to a couple of the province’s economic advantages.
“B.C. benefits from the fact that more of their exports go to faster-growing parts of the world like Asia,” he said. “And on top of that we’re also still seeing pretty strong activity in mining and gas, which other parts of Canada just don’t have.”
On the negative front for B.C., he said the continued weakness in the U.S. housing market will continue to impact forestry exports. He also noted possible softening in B.C.’s housing market.
“Valuations are pretty stretched, so if we do see a weaker growth environment, house prices in B.C., Vancouver particularly, could come under more pressure than other parts of the country.”
Jenny Wagler
@JennyWagler_BIV