B.C.'s economy will remain one of the fastest growing in Canada this year, according to Scotiabank's provincial trends report released today.
The province's economy is expected to grow by 3.3%, down from growth of 3.6% in 2006. Non-residential construction leading up to the 2010 Winter Olympic Games and a strong mining sector fuelled by high commodity prices are contributing to the province's economy.
B.C.'s growth is forecast to be second only to Alberta's, which is expected to grow by 4.1% this year.
The forestry sector, however, remains a drag on B.C.'s economy. It has been hard hit from reduced demand caused by a downturn in the U.S. housing market and a record-high Canadian dollar compared with the U.S. greenback.
According to the report, B.C.'s forest shipments, which account for a third of the national total, were down 20% compared with the same time last year.
B.C.'s lumber mills have been being hardest hit by the low demand and an over-supplied market, which the report predicts could result in further mill closures in the province.
In June, both Tembec and Canfor announced closures that affected 14 B.C. mills and cut roughly 209 million board feet of production.
In the paper sector, pulp, buoyed by strong demand from China and Western Europe, remained the lone bright spot. However, excess newsprint production capacity in North America could result in further mill shutdowns.
Tourism continues to be hampered by the strong Canadian dollar and the lingering effects of 9/11 and the SARS outbreak. The provincial government's long-term Tourism Action Plan aims to address currency and other concerns with the goal of doubling tourism revenue to $18 billion and creating more than 80,000 tourism-related jobs by 2015.