In 2013, BC's economy was stronger than estimated

According to figures recently released by Statistics Canada, BC’s economy grew by 2.0% in 2013. Considering that prior to the official data being released the consensus estimate was that economic growth would come in at 1.4% in 2013, the above-expectations 2% expansion looks pretty good. In a historical context and relative to other provinces, however, BC’s economic performance was more on the modest side. Over the past decade and a half, real GDP growth has averaged 2.4% so 2013’s gain was a little subpar. And in comparison to other provinces BC ranked fifth among the ten provinces.

By industry the performance was mixed. Measured in constant dollars, the value of output in the oil and gas sector slipped (-1.6%) as did residential construction (-0.5%). Overall manufacturing activity contracted slightly (-0.2%), due in part to a sizable contraction in the pulp and paper sector. And for the second consecutive year public administration was a drag on growth because of restraint at both the federal and provincial levels of government.

On the growth side, the forest sector provided a solid lift to provincial growth (forestry and logging grew 5% and wood product manufacturing expanded 7.6%). Strong growth was also seen in the mining sector (10.7%). The accommodation and food services sector grew by 3.9%, which apart from 2004 was the largest gain for this sector going back to 1997.

Looking ahead we expect BC’s economy will gradually strengthen and expand by 2.3% in 2014. Although the mining sector will likely transition to being a drag on growth, forestry will continue to expand, residential construction should perk up, the food and accommodation sector should put in another solid performance (helped by the lower dollar) and government restraint will wane so the public sector in longer a drag on growth. A stronger US economy coupled with the weaker dollar should help lift non resource manufacturing activity.