Soft growth in China is underscoring the forecast for a weak global economic outlook in 2016, but British Columbia could be poised to thrive over the next year, according to a Business Council of B.C. (BCBC) report released February 11.
While much of the rest of Canada is seeing a downturn this year, “B.C. is holding up surprisingly well,” the BCBC said in its report. The council expects the country to experience real GDP growth of 1% this year; in B.C., this number jumps to 2.8%. Prospects are similarly positive for 2017, with Canadian real GDP growth forecast at 2.1% and B.C.’s forecast at 3%.
“Against the backdrop of diverging growth prospects across the developed and emerging economies and substantial declines in the prices of many commodities, British Columbia is poised for another year of respectable economic performance in 2016,” the BCBC said in the report.
“The province’s economy is being held back by low prices for many commodities, but non-resource merchandise and service exports are kicking into gear, aided by the low Canadian dollar.”
This growth is based on the assumption of at least one large LNG project moving forward by the end of the year, however, and this is by no means a sure thing. Last week, Shell announced it was postponing its final investment decision on its proposed Kitimat LNG project. On the other hand, Petronas announced at the end of January that it had leased two floors in a downtown Vancouver office building, which could point to intentions to move forward with its Pacific NorthWest LNG project.
Outside of LNG prospects, much of the province’s strength is due to its diversified industrial and export base. A weak Canadian dollar has boosted some categories of exports; for example, agricultural and machinery exports both grew 20% last year. Low commodity prices are weighing on some of B.C.’s international exports, however, and exports of metallic mineral products dropped 3.5%, gas was down 40% and coal fell 15%.
B.C. will see an active housing market in the coming year, according to the BCBC, aided by a migration of workers from Alberta, low interest rates and foreign investment.
Consumer spending has been and will continue to be strong, the report said, aided in part by a low loonie keeping Canadians shopping on this side of the border.
The weak dollar is also providing a boost to B.C.’s tourism sector.
“After a decade of grappling with border delays and security issues, the Great Recession and the Canadian dollar that for a time was clearly ‘overvalued,’ tourism in B.C. is reaping dividends from the loonie’s slide along with lower gasoline prices and the rebound in American consumer spending,” the BCBC said in its report.
The number of American tourists visiting for multi-day stays grew 10% in 2015, and hotel occupancy rates increased by a similar amount.
“We are optimistic about the B.C. tourism sector’s prospects over the next few years,” the report said. “An attractively priced Canadian dollar will boost the number of U.S. visitors, while the still-expanding middle class in China and other parts of Asia should be a source of additional gains for the industry.”
The low dollar is also keeping Canadians in the country when it comes to travel, which is further boosting the tourism sector.
Film and TV is seeing a boom in B.C., again due in part to the weak Canadian dollar.
“Together with a highly skilled workforce, a number of top studios and a growing digital animation sector, the lower dollar makes B.C. an appealing place for U.S. film and TV productions.”
This is not the first report stating B.C. will outperform the rest of the country in terms of economic growth. The Conference Board, CIBC, BMO and Central 1 Credit Union have released similar reports in the past few months.-With files from Nelson Bennett and Tyler Orton
@EmmaHampelBIV
