The B.C. economy has improved significantly thus far in 2013.
According to BC Stats, on the export front, lumber, copper and even natural gas have posted double-digit percentage increases in the first four months of the year compared with exports in the same period last year.
Exports of machinery and equipment have also improved.
In addition, B.C.’s strawberry growers have recorded a bumper crop in 2013, and if the favourable weather holds, the province’s blueberry industry could have another record year.
Despite these positive developments, the province’s overall economy hasn’t improved as quickly and to the extent that many had hoped at the start of the year. Most economists have downgraded their B.C. forecasts in recent weeks (See “B.C.’s economy a write-off in 2013” – BIV issue 1236; July 2-8).
Optimism among financial advisers is also eroding. About 53% of advisers in a survey conducted by Ipsos Reid for SunLife Global investments (Canada) expect the Canadian economy to either remain unchanged or shrink for the remainder of the year.
Sluggish growth might also explain why prices have not risen substantially in recent months. B.C.’s consumer price index (CPI) rose just 0.3% in May, chipping away at the meaningful decline in April from the return of the PST and GST. For the year, RBC is expecting prices to remain largely unchanged, rising only 0.5% in 2013, well below the 2.3% in 2011 and 1.1% in 2012.
The sluggish overall economy is hoped to get a kick-start in 2014. Most economists have maintained their forecasts for B.C. GDP growth of above 2.5%. RBC has even ratcheted up its growth forecast somewhat from the 2.6% made earlier this year.
In addition to further improvement in B.C.’s exports, RBC is “anticipating a ramp-up in capital spending that will boost B.C. economic growth to a rate of 2.7%.”
B.C.’s housing market may also see a recovery. The Canada Mortgage and Housing Corp. is forecasting a 5.1% increase in housing starts in B.C. and an 11% increase in existing home sales in 2014.
Coupled with continued improvement in the U.S. housing market forecast by Scotiabank, B.C.’s economy could indeed meet expectations. •
