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Quarterly Update: Impact of Slowdown in Asia Showing UP in BC Exports

In our summer 2012 economic update, we held our forecast for BC’s economy to grow by 2% for the year, citing the fact that a slight improvement in the domestic economy would likely offset the impact of a somewhat weaker global economy on the province’s export sector. While recent developments in the housing market prompt some concern about the resilience of the domestic side of the BC economy, elevated activity in non-residential construction is providing a boost to overall spending. Recent data also paint a mixed picture for BC’s exports. The slowdown in Asia is already showing up in BC’s exports, but shipments to the US are gradually recovering.

While it is a close call, as shifting domestic and external growth drivers are largely offsetting, the softer economic outlook for Asia has convinced us to trim our BC GDP growth forecast this year to 1.9% from 2%. Having already cut the outlook for 2013, and anticipating that China’s stimulus efforts will have some traction, we are leaving next year’s growth projection for BC unchanged at 2.2%.

Key factors in impacting BC’s economic outlook:

  • The value of BC’s exports to China is down 3.7% year to date
  • Excluding natural gas, exports to the US are growing at their fastest pace in seven years
  • Retail spending in BC is up 3.9% year to date
  • The number of homes in BC sold through the MLS system is down 25% from year-ago levels, average price of a home sold is off by 9%
  • Non-residential construction is back to peak, pre-recession levels seen in 2006/2007