First BMO , then the Conference Board of Canada and now Central 1 Credit Union: the consensus is British Columbia is set to take the lead in economic growth in Canada.
Central 1 predicts low oil prices, a weak Canadian dollar and low interest rates will bolster household spending and exports in this province, offsetting a weak mining sector and a poor outlook for LNG. The result will be gross domestic product growth of 2.9% this year, 3.1% in 2016 and 3.3% in 2017, the credit union predicts.
“B.C.’s economy is showing few ill effects from the recent tumble in oil prices,” said Central 1 senior economist Bryan Yu. “Consumers and businesses are benefitting from lower energy prices and interest rate cuts.
“Meanwhile, the weaker Canadian dollar is boosting tourism, TV and film production, and export demand.”
Household spending will be a “cornerstone for growth” in this province, Central 1 said in its report released June 2.
“Retail spending growth, which has been on a strong early-year pace is anticipated to expand by about five per cent per year,” the report said. “While some of the gain reflects increased tourism spending, a strong early-year uplift has been driven by vehicle purchases and housing-related activity.
“Gains will also boost the related wholesale trade sector.”
The unemployment rate is forecast to average 5.7% this year and drop to 5.8% in 2016 and 5.5% in 2017.
Central 1 said it doesn’t expect to see much growth in the mining sector as commodity prices are forecast to remain low.
“Copper and gold prices are down nearly 10% from a year ago – the lowest levels since 2010 – and coal prices are at recessionary lows,” said the report.
“With China to remain in a relative slow growth cycle, even with some stimulative measures, and the world flush in metals, we see little impetus for a substantial lift in prices and by extension sector investment.”
