B.C. (almost) topped the provincial growth rankings in 2018 and enjoyed a period of healthy gains in overall prosperity

It is fair to say B.C. led the country in economic growth in 2018, but it is more accurate to say B.C. and P.E.I. shared top spot, with each province’s economy expanding by 2.6% (after inflation). While economic growth in the two provinces may have been the same last year, they are very different in size. The real GDP of Canada’s smallest province is just $6.3 billion, whereas British Columbia’s is $264 billion. B.C. and P.E.I just managed to outpace Quebec, which grew by 2.5% last year.

Figure 1

B.C. and P.E.I. Topped the Provincial Growth Rankings in 2018

* 2012 chained $

Source: Statistics Canada, Table: 36-10-0222-01.

Taking a longer-term perspective, B.C. has led the way in overall economic growth for a half-decade. The figure below shows average real GDP growth for all of the provinces from 2013 to 2018. Over the five-year period, the B.C. economy expanded at an average annual rate of 3.0%, well ahead of the Canadian pace (1.9%) and comfortably ahead of Ontario (2.4%). The impact of the 2015-2016 oil price collapse (and ongoing market access problems) is evident, as the once high-flying Alberta and Saskatchewan economies managed only 1.0% and 0.8% average growth rates, respectively, from 2013 through 2018. And Newfoundland’s economy actually contracted at annual rate of 0.8%.

Figure 2

But Over The Past Five Years, B.C. is Clearly the Growth Leader

* 2012 chained $

Source: Statistics Canada, Table: 36-10-0222-01.

Of greater interest is the trend in real economic growth per capita. On this more meaningful measure of advances in prosperity, B.C. has also performed quite well. Second only to Quebec, B.C.’s per capita real GDP rose by 1% in 2018. While this is far from a world-beating result, it is well ahead of the other provinces.

Figure 3

In Per Capita Terms, B.C. Real GDP Growth was Ahead of All Provinces But Quebec

* 2012 chained $

Source: Statistics Canada, Table: 36-10-0222-01 and 17-10-0005-01 for population.

Looking again to the past five years, B.C. has enjoyed a period of healthy gains in overall prosperity. The province’s 1.4% average per capita real GDP growth rate is nearly double the national benchmark. Ontario and Quebec are not far behind, but after that the other provinces drop off quickly. The impact of the oil price collapse is again evident when growth is measured in per capita terms. The three most oil dependent provinces have all seen outright decreases in living standards as proxied by real GDP per person.

Figure 4

B.C. Has Enjoyed Solid Per Capita GDP Growth

* 2012 chained $

Source: Statistics Canada, Table: 36-10-0222-01 and 17-10-0005-01 for population.

Further testament to B.C.’s resilient economy is that average per capita growth during the past five years has kept pace with the province’s average annual gain over the prior two decades. Moreover, B.C. is the only province to maintain steady per capita GDP growth. All of the other provinces have experienced a (sometimes significant) slowing in average annual per capita GDP growth when the past five years are contrasted against the preceding two-decade average.

Figure 5

B.C. is the Only Province to Maintain Average Per Capital GDP Growth

* 2012 chained $

Source: Statistics Canada, Table: 36-10-0222-01 and 17-10-0005-01 for population.

The bottom line is that B.C. stands out from the rest of the country, both in overall economic growth in the past few years as well as in per capita growth. Looking ahead, it may be more challenging to sustain this strong performance, in part because the past five-year average includes a period of unusually robust residential real estate investment, above-average growth in exports, and above-average increases in consumption spending. All three of these elements are slowing and we believe they will drag the five-year average down as we move through 2021/2022. Having said that, non-residential construction spending in B.C. is buoyant, boosted by LNG Canada’s massive $40 billion investment and numerous other large capital projects.

In short, it isn’t wise to sell the B.C. economy short. Even if we account for relatively rapid population growth, the province has done well by Canadian standards over the last several years.