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Economy

As trusted economists and policy advisors to business and government leaders, the Council relies on sound, evidence-based analysis to inform its policy recommendations. Through diligent tracking of BC’s economic performance, we help identify the opportunities and challenges the province must navigate in order to reach its full potential.

 

Growing Forward: Cultivating Productivity in BC’s Agrifood Supply Chain

The combination of $12B in annual revenue (in 2015) from the mix of agrifood-related activities collectively represents a sizeable contribution to the provincial economy. As for employment, the entire agrifood supply chain supports more than 300,000 jobs, although the bulk of these are in the retail/wholesale and food and beverage segments of the sector.

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Fast Facts on BC's Tech Sector

Tech is a good news story for BC – a story that we expect to continue. The province enjoys strengths in several different technology-based clusters – software and information and communications technologies; wireless technologies; bio-tech, life sciences and health innovation; clean/green technologies; and gaming and digital animation. Today's blog offers a few key facts about BC's Tech Sector.

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Consumers Helping Drive Growth in BC

Propelled by strong spending growth, the total value of retail sales in BC surpassed the $70 billion mark in 2015. Sales at stores, malls and shops are growing at a healthy clip and are a significant factor underpinning BC’s solid overall economic performance.

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Priorities for the 2016 Federal Budget

Business Council priorities for the 2016 Federal Budget.

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The 2016 BC Budget: High Marks for Fiscal Management...
But BC Must Do More to Improve Competitiveness

Unveiled by Finance Minister Mike de Jong on the afternoon of February 16, Budget 2016 tells a generally upbeat story of British Columbia’s economic performance and fiscal health. Economic and job growth are running above the national average, and BC is one of only two provinces expected to post a balanced operating budget (or surplus) both this year and in 2016-17.

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Finlayson Op-Ed: Commodity Slump weighing on Canadian and global economies (Troy Media)

The ongoing decline in the U.S.-dollar prices of most internationally traded commodity products has hit Canada’s economy hard, depressing incomes, triggering layoffs and capital spending cuts by hundreds of resource companies (and their suppliers), and hurting business and consumer confidence across swathes of the country.  It’s important to realize that the commodity carnage isn’t restricted to oil.  It’s also affecting natural gas, coal, base metals, potash, various industrial raw materials, and some segments of the agri-food sector.  Lumber prices have also beaten a hasty retreat in recent months.

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Finlayson & Peacock Op-Ed: British Columbia is out-performing most other provinces (Vancouver Sun)

Against the backdrop of slumping commodity markets and tepid global growth, British Columbia near-term economic prospects are surprisingly positive, creating a largely favourable backdrop for this week’s provincial budget. A recent Business Council report highlights some of the reasons why B.C. is doing better than Canada on several widely-cited performance metrics — including economic growth, job creation, retail sales, and housing-related investment.

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BC's Growth Story Remains Intact...Despite An Uninspiring Global Backdrop

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.

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Canadian Head Office Survey: How Do Metro Vancouver and British Columbia Stack Up?

This issue of Policy Perspectives reviews the recently released Statistics Canada Annual Head Office Survey, comments on its implications for BC/Metro Vancouver, and offers a few thoughts on factors that contribute to a robust head office “ecosystem.”

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Commodity Price Slump is Weighing on the Canadian and the Global Economies

The ongoing decline in the US-dollar prices of most internationally traded commodity products has hit the Canadian economy hard, depressing incomes, triggering layoffs and capital spending cutbacks by hundreds of resource companies (and their suppliers), and hurting business and consumer confidence across much of the country.

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Jock Finlayson Presentation Peering Through the Gloom: The Longer-Term Outlook for Commodities Presented at the BC Natural Resources Forum, Prince George, January 20, 2016

On January 20, 2016, Jock Finlayson participated in the Invested in Resources - Finances panel moderated by the Honourable Shirley Bond, Minister of Jobs, Tourism and Skills Training at the BC Natural Resource Forum in Prince George. Jock's presentation provides an overview of the current global economic climate and describes how British Columbia is well positioned to benefit from growth in global demand for many natural resource-based products over the next 25 years. Key to this will be government policy that focuses on creating a competitive operating environment to attract investment in resource extraction and upgrading --as well as in related infrastructure development.

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D'Avignon & Finlayson: If we don't supply oil, others will (Vancouver Sun)

It is time for a mature conversation on oil exports, against the backdrop of the economic reality we face in Canada and around the world.  Simply put, the evidence confirms that all of us will continue to need all forms of energy, including oil, over the coming decades.  For Canada, the key question is whether we want to have the option to safely export our oil to global markets other than the United States, currently our only customer, and which pays less than the world market price and requires less of our product each year. In 2013, energy made up one-quarter of Canada’s merchandise exports, of which oil and gas constituted the vast majority.  Finding ways to access the world market for our country’s biggest export industry should be a priority for all governments in Canada.

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Finlayson & Peacock: Five key economic predictions for 2016 (Business in Vancouver)

It’s the time of the year when business and government decision-makers are tempted to throw caution to the wind and ask economic soothsayers to forecast what lies ahead.  Below we take up the challenge, knowing that we may miss the mark in one or two areas but confident that our overall assessment will stand up to scrutiny.

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10 things to watch for in 2016

Last December, we compiled a list of ten things to watch for in 2015, with a focus on those expected to impact the provincial economy.  This year we are again compiling a list of trends and developments we believe will shape the BC economy in 2016.

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Finlayson: Canadian economy will remain sluggish in 2016 (Troy Media)

As the clock ticks down on 2015, it is time to ponder what may lie ahead for Canada’s economy. The near-term picture isn’t particularly heartening.  After a disappointing 2015 that included a minor “technical” recession in the first half of the year, Canada looks poised for a somewhat better, but still generally lackluster, performance. 

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Finlayson Op-Ed: B.C.’ s industrial economy is fading (Vancouver Sun)

Statistics Canada recently reported that B.C.’s economy grew by 3.2 per cent after inflation in 2014, putting B.C. second among the provinces. Gains in residential and commercial construction and a solid advance in consumer spending were the key contributing factors. The job market, however, was surprisingly subdued, with employment rising by less than 1 per cent on a year-over-year basis.

As the clock winds down on 2015, it appears that B.C.’s macro-economy continues to perform fairly well, at least by Canadian standards. Economic growth should end up exceeding 2.5 per cent this year, with strength in retail sales, housing-related activity, tourism, film production, and parts of the advanced technology sector. At a time when Canada’s economy is being pummeled by a deep slump in global oil and metals prices, B.C. is holding its own.

Yet if we look below the surface, the economic picture in the province is less favourable. In particular, what might be described as the “industrial economy” is clearly struggling, with negative implications for business investment and exports.

The “industrial economy” consists of primary resource extraction and related downstream processing in the forestry, mining, and agricultural sectors; the production, transmission and exporting of energy; oil and gas refining, chemical production, and cement/concrete manufacturing; food processing; plastics; non-metallic minerals; metal fabrication; primary metal manufacturing; and beverage manufacturing industries.

Taken together, the industries carry significant weight in our economy. Collectively, they employ almost 200,000 British Columbians, most of whom enjoy wages and benefits that surpass the average. These industries also represent an important source of demand for the outputs of many B.C. service sectors, including transportation, engineering, scientific and technical services, other professional services, environmental consulting, and financial services. Perhaps most strikingly, the enterprises that comprise the industrial economy dominate B.C.’s export base, accounting for around four-fifths of the province’s international exports, year after year.

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BC Consumers Are Out Spending

Retail spending in BC continues to grow at a healthy pace. Just released data from Statistics Canada shows retail sales in September were up 6.0% over the same month last year. This is the strongest annual gain among the provinces and stands in sharp contrast to Alberta’s 5.6% drop in retail spending.

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British Columbia Since 1995: A Brief Retrospective

As we ponder what British Columbia will look like in 2035 as part of our 50th anniversary programme, it is useful to review how the province’s economy and society have been reshaped over the past two decades, a period of time that has seen the rise of Asia, an expansion of BC’s gateway economy, the development of new and emerging industries, various commodity cycles, changes in the currency, steady inflows of migrants, population aging, and continued urbanization. 

What follows is a brief snapshot of a number of significant, high-level economic and demographic trends that have influenced the province since the mid-1990s.  But first, to provide a bit of context, we highlight a few features of the political setting and the wider external environment from two decades ago. 

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Peacock Op-Ed: Canada’s Participation in the Trans-Pacific Partnership is Good for BC (Business in Surrey)

Canada was at the table when negotiations recently concluded for the Trans-Pacific Partnership (TPP) agreement, the largest, most ambitious free trade initiative in history. This is good news for ourprovince. The TPP is a comprehensive trade deal that will help expand and secure access to much of the markets of key Asia-Pacific nations. Although growth in emerging markets has slowed of late, Asia is still projected to comprise two-thirds of the world’s middle class by 2030-35, and will grow to account for upwards of one-half of world GDP within three decades. There will be early benefits from participating in the TPP, but most of the upside will emerge over the medium term.

The TPP currently has 12 participating countries:  Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Over time the expectation is that other countries, perhaps including China and South Korea, will also join. Last year, BC exported nearly $23 billion to the other 11 TPP member countries, which accounted for more than 60% of our total merchandise exports.

One reason the TPP is good for BC is it will enhance and deepen these existing trading relationships. Once in force, the agreement will eliminate tariffs on almost all of BC’s key exports and provide secure access to growing economies in the Asia-Pacific. BC will have an advantage over non-TPP countries (notably Europe and Russia) by having duty free access for most of our major merchandise exports, including: wood and other forest products; aluminum, iron and steel products; seafood; agricultural products, and chemicals and plastics. Although global trade has been liberalized and barriers have been steadily lowered over the past few decades, BC’s exports still face sizable tariffs in some TPP markets, ranging from 5% to as much as 40% in a few countries. Japan, BC’s third largest export market, levies tariffs of 6% on some lumber products, 5% on many seafood items and 15% on ice wine. Malaysia has stiff tariffs of 40% on some plywood and panel products. Vietnam also has many punitive tariffs in place.

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Finlayson Op-Ed: Memo to Finance Minister Bill Morneau (Troy Media)

Congratulations on your election to the House of Commons as the MP for Toronto Centre and your appointment as Minister of Finance.  Business leaders across Canada wish you well as you come to grips with the economic challenges that lie ahead.

One challenge is that Canada appears to have entered a period of sub-par growth.  Our economy lost ground over the first half of 2015, largely due to the impact of sharply lower oil prices together with weakness in the markets for many other commodities that form a large part of Canada’s export basket.  More recent data signal a pick-up in activity over the summer and into the fall.  However, for 2015 as a whole, inflation-adjusted gross domestic product (real GDP) is likely to increase by perhaps 1 per cent, down from an average of 2.2 per cent over 2013-14.

The economy should gain a bit of momentum through 2016, in response to the ongoing expansion in the United States, the low Canadian dollar, and continued accommodative monetary policy.  Real GDP is expected to climb by 1.5-2.0 per cent next year.  But looking further ahead, Canada also faces stiff economic headwinds from lower-for-longer commodity prices, record high levels of household indebtedness, and weak overall business investment. A slow growth macro-economic environment lends support to your government’s plan to expand infrastructure spending over the next few years.   But while spending more on infrastructure is a sound idea, the most convincing reason for doing so is not to boost short-term aggregate demand, but instead to make Canada’s economy more productive and competitive.  This includes ensuring that critical infrastructure is in place to enable our resource, manufacturing and tourism industries to connect with and efficiently sell into global markets.

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