Vancouver’s growth in GDP is expected to level off this year, partly due to government restraint, but will be offset by strong job growth and a booming mining sector, which is expected to help boost GDP to 3.4% in 2013, according to the Conference Board of Canada.
The conference board released its Spring 2012 Metropolitan Outlook Tuesday. The report compares 13 Canadian metropolitan economies.
Vancouver’s 3.1% growth in GDP in 2011 tied it with Calgary for fourth place. The prairie cities of Regina, Saskatoon and Edmonton outpaced all other cities, with GDP growth of 6.1%, 4.8% and 4.4% respectively.
Although there were fluctuations in 2010 and 2011, B.C. and Vancouver proved to be in stable recovery mode, the report states.
A solid year at Vancouver’s port showed 4.8% growth in the transportation and warehouse sector. While consumer spending tailed off in 2011, Vancouver’s domestic GDP rose by 3.45% in 2010 and 3.1% in 2011.
That growth is expected to slow to 2.5% this year and then gain about 1% in 2013. Mining is expected to drive growth in B.C. by double digits in 2012 and 2016.
One of the things slowing GDP growth in Vancouver and other Canadian cities is the winding down of 2008-09 government stimulus packages. Government investment is expected to decline 10.9% this year.
“Further austerity is expected next year as the government looks to balance its budget, resulting in a 9% decline in government investment spending,” the report states.
But that decline in spending will be more than offset by investment in large projects in northern B.C., including the construction of a new liquid natural gas terminal and modernization of an aluminum smelter in Kitimat, as well as work on the Mount Milligan mine. And despite low prices, B.C.’s natural gas industry is expected to perform well in 2012, thanks to relatively low extraction costs.
In B.C.’s forest sector, a stronger U.S. housing market and increased demand from China are expected to boost demand for B.C. forest products by 4.4% next year.
Manufacturing, meanwhile, is expected to remain “modest” this year due to a soft global demand. Vancouver’s construction sector is also expected to see only modest growth this year.
Despite the expected slowing of GDP in Vancouver this year, “Vancouver’s labour market will continue to hum along,” the outlook states.
The report projects 25,000 new jobs will be created this year alone – a 2% increase.
“This means that roughly 72,000 new positions will have been created since employment contracted in 2009,” the outlook states. “However, it will not be until 2013 that Vancouver’s consumers come to life, helping GDP to go up then by a solid 3.7%.”
