Vancouver, BC – July 23, 2019 - The Business Council of British Columbia (BCBC) is expecting slowing economic growth in the province and has downgraded its forecast to 2% real GDP growth for 2019, down from 2.2% in our previous Economic Review and Outlook (BCERO) publication.
Key highlights of the updated outlook include:
- Growth for B.C. has been downgraded to 2% from 2.2% in our previous update. Next year, we expect a slight pick up to 2.3% as LNG Canada’s huge project moves forward;
- Despite slower growth, the province’s job market remains healthy overall, although employment levels are falling in some resource-dependent regions;
- Consumer spending in the province remains sluggish;
- The earlier boom in sectors tied to real estate and residential credit continues to unwind;
- Non-residential construction is a bright spot for the B.C. economy; and
- Conditions in the province’s export sector are mixed, but most segments, including tourism, are slowing.
“Absent booming real estate transactions and related consumer spending, which have cooled across many Asia-Pacific regions, the B.C. economy is poised to record three consecutive years of below average growth,” said Ken Peacock, the Business Council’s Chief Economist. “In our previous quarterly outlook, we stated that the B.C. growth dynamic would shift to some extent. This is now happening, but the slowdown in sectors tied to real estate sales is steeper than we anticipated.”
Despite the 2018 -2019 provincial budget surplus confirmed in the audited public accounts released last week, the B.C. government is likely to experience more sluggish revenue growth going forward. Difficult economic conditions in forestry and mining, continued softness in real estate markets, and slower growth in sectors like tourism will weigh on revenues, suggesting the province will be hard-pressed to post another budget surplus.
“The B.C. economy is navigating the roughening waters of a weak global growth outlook, U.S.-China trade tensions, a Canadian economy that has not grown in per capita terms for two years, and the unwinding of an unprecedented boom in real estate and residentially-secured credit,” said David Williams, Vice President, Policy and co-author of the BCERO. “The underlying softness in B.C.’s economic growth is magnified by these factors and this is reflected in our findings.”
Growth in the provincial economy continues to moderate. For more than a year, the rate of turnover of established real estate properties and consumer spending have stood out as key soft spots. However, the slowdown now seems to be broadening. The external environment has also become less supportive for B.C. This trend is dampening activity in the export sector, as the value of B.C.’s merchandise exports sags. Recent facility closures and production curtailments in the forest sector are an example of the troubles facing the province’s number one export sector, which government policies are aggravating. Tourism has also downshifted from a being a growth leader to eking out at best very small gains this year.
Even as the economy cools, the population continues to rise, and the job market looks healthy. Through June, the average employment level is up 3.4% compared to the same period last year. The unemployment rate is hovering near record lows – averaging 4.5% so far this year, down from 4.8% in 2018.
BCBC will continue to monitor regional labour markets to see to what extent resource dependent communities are at risk of further job declines. We will also be watching the giant American economy as the U.S. enters the 11th year of an unusually lengthy expansion amid signs that a significant downturn could materialize within the next 12 months.
The next B.C. Economic Review and Outlook is scheduled for release in early October 2019.
To download the full BCERO, click here.
About the Business Council of British Columbia
Now in its 53rd year as the premier business organization in British Columbia, the Business Council of B.C. is a non-partisan organization made up of 200 of the leading and largest companies, post-secondary institutions and industry organizations from across B.C.'s diverse economy. The Council produces high quality public policy research and advocacy in support of creating a competitive economy for the benefit of all British Columbians.
Director, External and Strategic Communications