B.C.'s Outlook Still Decent as Real Estate Boom Unwinds
30-Second Summary
How has the B.C. economy fared amidst a background of soft external growth, a weak Canadian dollar, higher interest rates and a downturn in the province’s residential real estate sector? In this issue of the B.C. Economic Review and Outlook, authors Ken Peacock and David Williams look at 2019 first quarter results for the B.C. economy and judge risk to the economic outlook to be on the downside.
2-Minute Brief
Unlike the Canadian or the global economy, B.C.’s economy will continue to grow at a respectable rate of 2.2%. This growth, however, is slower than in recent years (2017-2018). What is behind this anticipated moderation in growth? Here are the three trends to watch out for:
- The era of ultra-loose global monetary policy came to an end in 2017-2018, contributing to softer global growth. The impact of U.S. fiscal stimulus is also fading on the U.S. economy.
- Conditions in British Columbia’s export sector are mixed; the weak Canadian dollar is a plus, but the softer external backdrop is weighing on merchandise exports.
- The downturn in B.C. housing resales and related consumer spending is also a drag on GDP growth. The near-term outlook for the province’s real estate sector remains unsettled and the market is likely to continue sliding this year. With higher mortgage rates and tighter credit access over the past two years, against a backdrop of unprecedented household debt levels, it is not surprising to see B.C. consumers reining in their spending.